Has Warren Buffett found love for Uday Kotak's bank? Berkshire Hathaway to buy stake; Guess what! Kotak Mahindra Bank denies, shares skyrocket
It is being reported that the Oracle of Omaha, the man who is referred as equity king worldwide, Warren Buffett is looking to buy a stake in Uday Kotak's KMB.
A big surprise was unleashed on Indian markets today. There was sudden cheer among investors over Kotak Mahindra Bank. This Uday Kotak led bank has become the most preferred stock today, so much so, that its price has skyrocketed over 9% on Sensex. Such upbeat sentiment on Kotak Mahindra Bank comes courtesy a massive good news for India! It is being reported that the Oracle of Omaha, the man who is referred as equity king worldwide, Warren Buffett is looking to buy a stake in Uday Kotak's KMB. Talks are underway. Notably, if the stake sale happens, it is believed, that this would be the first Indian bank where Buffett will make an investment. However, this good news was soon shattered by Kotak Mahindra Bank when BSE asked clarification over the buzz.
Kotak in a clarification to Sensex said, "Kotak Mahindra Bank is unaware of any plans by Berkshire Hathway buying stake in the bank as stated in the story."
After the reply, the shine of Kotak Mahindra Bank was lost as it was trading at Rs 1,237.00 above Rs 55.50 or 4.70% at around 1329 hours.
It was a CNBC TV18 news in morning which stated that Warren Buffet's Berkshire Hathway mullying buying atleast 10% stake in Kotak Mahindra Bank. This report has sparked investor trading in Kotak Mahindra Bank stock. At around 1137 hours, the share price of Kotak was trading at Rs 1,320.35 above Rs 138.85 or 11.75% on Sensex. However, the bank has touched an intraday high of Rs 1,345.35 rising by nearly 14%.
A CNBC TV18 report has said that Warren Buffett’s Berkshire Hathaway is in talks to buy a 10 percent stake in Kotak Mahindra Bank valued at between $4 billion and $6 billion.
Sources told the news agency that Berkshire Hathaway is looking to buy promoter stake or via a preferential allotment.
However, Kotak Mahindra Bank has declined to make any comments on the development, and a reply is awaited from Berkshire.
Critically, it needs to be noted that, Uday Kotak has to dilute his stake below 20% by end of this month, as per RBI's direction. RBI has put him under scanner over this already.
If that is the case, one can expect a Berkshire entry in Kotak Bank. And what could be better for Uday Kotak than giving his stake to Buffett who is adored by every investor.
The buying sentiment from investors also comes as a confirmation that Kotak Bank's share price is seen going much higher from current highs, considering Buffett is an investor who wouldn't make any investment if he didn't believe there is a big potential in a company.
How exactly the deal will pan out, and when will it take place or is there a talk underway will be keenly watched. For now, investors had given their thumbs up to Kotak Mahindra Bank over such a development actually fructifying.