CPPIB, CDPQ pay $337m for stake in India's Kotak
Canada Pension Plan Investment Board (CPPIB) and Caisse de dépôt et placement du Québec (CDPQ) have paid INR23 billion ($337 million) for a 1.5% stake in India’s Kotak Mahindra Bank.
Public market information shows CPPIB and CDPQ bought 9.2 million and 18.4 million shares, respectively, at INR817 each from Uday Kotak, the founder, managing director and vice chairman of the bank. The sale complies with a recent order by the Reserve Bank of India (RBI) for Kotak and other promoters to lower their collective holding from 33.6% to 30% by the June 2017, 20% by December 2018, and 15% by March 2020.
CPPIB’s purchase raises its stake in the bank to 6.26%. The group has already invested in Kotak several times, most recently committing INR11.5 billion for 18.1 million shares held by Japan’s Sumitomo Mitsui Banking Corporation last year. Last August CPPIB received permission from RBI to buy up to 10% in Kotak, beyond the 5% ownership limit in Indian banks for foreign financial investors.
Along with investing in the bank itself, CPPIB also partnered with its parent Kotak Mahindra Group last March to invest up to $525 million in distressed assets in India. CPPIB will invest up to $450 million in a joint vehicle aimed at providing financing solutions to companies on request and participating in stressed asset sales by banks.
CDPQ’s investment represents its first commitment to Kotak and its entry into India’s financial sector. The pension plan founded its India office a year ago, seeking investments across all asset classes in South Asia and committing to invest $150 million in Indian renewable energy assets in particular.
The group has already made several investments in India, joining Kuwait Investment Authority to back an energy platform launched by ICICI Venture and Tata Power and purchasing a 70% stake in logistics player TVS Logistics held by KKR and Goldman Sachs. In October CDPQ also agreed to invest up to $700 million in Edelweiss Group for investments in private debt in India.
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