Kotak Mahindra Bank’s shares rose the most in nearly nine years on Friday following a CNBC-TV18 report that Berkshire Hathaway Inc. is in discussions to purchase a 10% stake in the lender led by Uday Kotak. Berkshire is the conglomerate run by billionaire Warren Buffett.
The deal, through which Berkshire may buy promoter stake or get fresh shares, may be valued at $4-6 billion (Rs 28,230-42,345 crore), the report said, citing unidentified people.
Reacting to the report, Kotak Mahindra Bank said in a stock-exchange filing it is unaware of any plans by Berkshire to buy stake in the lender.
As per the Reserve Bank of India (RBI) guidelines, Uday Kotak should bring down his stake in the bank to below 20% from the current 29.73% by December 2018. Promoter shareholding needs to be further brought down to 15% by March 2020.
Uday Kotak had earlier sought RBI's nod for selling nonconvertible perpetual noncumulative preference shares to bring down his stake in the bank to 20%. In August, RBI refused to greenlight the proposal saying it was not acceptable.
If the Berkshire deal goes through, it will be Buffett’s second big investment in India after the Oklahoma-based company agreed to acquire a stake in Paytm’s parent company, One97 Communications Ltd.
Separately, Jet Airways promoter Naresh Goyal is in talks with Abu Dhabi-based NRI billionaire MA Yusuffali for investment in his debt-laden airline, The Times of India reported. Goyal is also urging Abu Dhabi’s Etihad, which holds 24% stake in Jet, to raise its holding to anywhere up to 49%.
Yusuffali is not new to aviation and Jet has been serving the Kerala-Gulf market for years.
“It is not going to be a simple transaction as a rights issue may be needed for Goyal and an Indian partner to hike their stake to meet SOEC (substantial ownership and effective control) norms while Etihad also raises its ownership in Jet,” said an aviation insider.
Goyal’s talks with the Tata group hit a dead-end as the latter wanted the Jet promoter to exit the airline, the report said.
In another development, pilot training institute Flight Simulation Technique Centre (FSTC) is in advanced discussions with private equity veteran Ajay Relan’s new fund, Xponentia Capital Partners, to raise Rs 75 crore ($10 million), two people in the know told Mint. Xponentia Capital Partners invests in midmarket growth companies.
FSTC, with close to one-third market share, operates five flight simulators. The private equity firm will pick up around 30% in the company, said one of the people cited above.
FSTC’s clients include Jet Airways, SpiceJet, IndiGo, Vistara, and the navy, according to its website.