Japan's Sumitomo Mitsui Banking Corporation on Wednesday announced that it would invest Rs 1,366 crore (Rs 13.66 billion) for a 4.5 per cent stake in private sector lender Kotak Mahindra Bank.
The Bank has entered into an agreement with Sumitomo Mitsui Banking Corporation (SMBC) to sell 1.64 crore (164 million) shares at Rs 833 a piece, aggregating to Rs 1,366 crore, Kotak Bank said in a filing to the Bombay Stock Exchange.
The selling price for Kotak shares is 12 per cent higher than Tuesday's closing on the BSE.
The agreement for stake sale comes a week after the Dutch financial services company ING exited Kotak Bank by selling its entire 3 per cent stake for Rs 801.1 crore (Rs 8.011 billion).
Soon after the announcement, shares of the country's fourth largest private sector lender surged 3.52 per cent to a high of Rs 746.65.
"We are delighted to welcome a reputed and large global financial institution of the stature of SMBC as our shareholder, as the Indian financial services industry continues its high growth trajectory," Kotak Bank vice chairman Uday Kotak said.
The cooperation would cover various businesses of mutual interest, including asset management, alternate assets, investment banking, and wholesale banking, the statement added. The banks expect the deal to close by September 2010.
Kotak said the two banks would leverage their strengths to serve the Indo-Japan corridor across a range of financial services.
As of March 31, 2010, Kotak Bank, including its group companies had 1,716 outlets and the consolidated total assets of over Rs 55,000 crore (Rs 550 billion), Sumitomo said on its website.
SMBC is a wholly-owned subsidiary of Sumitomo Mitsui Financial Group with over $1 trillion worth assets.
Nearly a fortnight back, Dutch lender Rabobank had sold its 11 per cent stake in Yes Bank for Rs 982 crore (Rs 9.82 billion).
Image: Kotak Bank vice chairman Uday Kotak. Photograph: Reuters
