Kotak Mahindra Bank surges on report of likely Berkshire investment

Shares of India’s Kotak Mahindra Bank Ltd (KTKM.NS) posted their sharpest surge in nearly nine years on Friday following a report that billionaire investor Warren Buffett’s Berkshire Hathaway Inc (BRKa.N) is planning to pick up a 10 percent stake in the bank.

US-based Berkshire Hathaway may invest between $4 billion and $6 billion in the lender by buying promoter stake or through a preferential allotment, television channel CNBC-TV18 reported, citing sources.

Uday Kotak, the billionaire head of Kotak Mahindra Bank, has been asked here by the country's central bank to lower his holding in the bank to 20 percent by the end of this year, and to 15 percent by March 31, 2020.

In August, the Reserve Bank of India said the CEO’s plan to reduce his stake by issuing non-convertible perpetual non-cumulative preference shares does not meet their promoter holding dilution requirement.

Uday Kotak directly held a 29.73 percent stake in the lender as of Sept. 30, 2018, according to data here on the Bombay Stock Exchange.

Kotak shares rose as much as 14 percent to 1,345.950 rupees, their highest since Sept. 3. This was the stock’s sharpest intraday gain since February 2010.

The stock was the biggest contributor to gains on the NSE index .NSEI, which was up 0.17 percent as of 0629 GMT.

Kotak Mahindra Bank and Berkshire Hathaway were not immediately available to comment on the matter.