At 2.15pm, the Kotak Bank stock was trading at Rs 1256.50 on BSE, up 6.35% from its previous close. Photo: Mint
Mumbai: Kotak Mahindra Bank shares erased half of their gains after the bank clarified to the stock exchanges that it is unaware of any purchase plans by Warren Buffett’s Berkshire Hathaway Inc. Earlier, CNBCTV18 reported that Berkshire Hathaway is looking to buy a 10% stake in Kotak Bank valued at between $4 billion and $6 billion. Following the announcement, the stock surged as much as 13.87%, its biggest jump since May 2009, to hit a high of Rs 1,345.35 a share. At 2.15pm, the Kotak Bank stock was trading at Rs 1256.50 on BSE, up 6.35% from its previous close, while India’s benchmark Sensex Index was trading higher by 0.6% to 35,524.74 points.
“We confirm that we have nothing to report to the exchanges on the said item. Kotak Mahindra is unaware of any plans by Berkshire Hathaway buying stake in the bank as stated in the story”, the bank said in a notice to BSE.
The RBI had mandated the Kotak Bank to reduce its promoter shareholding to 20% of the paid-up capital by 31 December 2018, and 15% by 31 March 2020. Uday Kotak, vice-chairman and managing director of Kotak Bank, holds a 30.03% stake in the bank.
In August, the RBI rejected Kotak Bank’s proposal to issue non-convertible preference shares to reduce the promoter holding. Earlier, Kotak Bank had said that it was planning to raise as much as ₹500 crore by issuing non-convertible perpetual non-cumulative preference shares to dilute the promoter shareholding.
Investors are closely watching Kotak Bank shares after, in October, RBI has cracked the whip on Bandhan Bank for failure to follow norms on promoter shareholding.
RBI barred Bandhan Bank from opening branches without its approval and ordered the freezing of the salary of its CEO Chandra Shekhar Ghosh. The action came after the bank’s failure to reduce the shareholding of its promoter Bandhan Financial Holdings Ltd from 82% to 40% within the 23 August deadline.