Canada pension fund buys stake in Kotak Mahindra Bank

Mumbai: Japan’s Sumitomo Mitsui Banking Corp. on Tuesday sold a large part of the Kotak Mahindra Bank Ltd stake to Canada Pension Plan Investment Board (CPPIB), which manages 268.6 billion Canadian dollars ($203.09 billion) in pension fund assets, according to two people aware of the development.

On Monday, Mint reported that Sumitomo was looking to sell almost half of its stake in the private sector lender for around $300 million (approximately Rs.2,050 crore).

As of 31 December, Sumitomo held a 3.58% stake in the private-sector lender, while CPPIB held about 3.91%, data from stock exchanges show.

“The book was opened last evening. CPPIB has bought the largest chunk of shares on offer. Some foreign institutional investors have also picked up stakes,” said one of the persons mentioned above, requesting anonymity. Domestic institutions did not participate in the share sale, he added.

Shares were offered to buyers in the price range of Rs.611.34-636.55 apiece, according to Bloomberg.

Citigroup Inc. is managing the share sale programme. After the transaction, Sumitomo’s stake in the bank will fall to around 1.79%.

The Japanese bank had picked up a 4.5% stake in Kotak Mahindra Bank in 2010 through a preferential allotment for Rs.1,366 crore.

Apart from its investment in Kotak Mahindra Bank, CPPIB has invested in infrastructure, real estate and private equity industries in India.

CPPIB’s exposure to the Indian infrastructure sector is through a Rs.2,000 crore investment in L&T Infrastructure Development Projects Ltd (L&T IDPL), which was announced in December 2014.

In real estate, the pension fund has partnered with the Shapoorji Pallonji Group and Piramal Enterprises Ltd.

Apart from investing through partnerships, the pension fund also backs domestic private equity funds in its capacity as a limited partner (LP). CPPIB has till date committed $300 million to Renuka Ramnath-led Mulltiples Alternate Asset Management Pvt. Ltd across its two funds. It has also committed $75 million to India Value Fund Advisors.

At 11.25am, shares of Kotak Mahindra Bank were trading at Rs.632.5 on the BSE, up by 0.36%, while the benchmark Sensex was trading at 23,511.96 points, up by 2.22%.

Kotak Mahindra Group