Citigroup is looking to exit Housing Development Finance Corp (HDFC) completely. The financial major has invited bids to sell its entire stake, 9.85 per cent, on Friday.
The deal, which could be valued at as much as Rs 10,200 crore, is likely to be the biggest block deal in India since 2005. Last year, Petronas sold its stake in Cairn India for Rs 9,383 crore. This would be Citigroup’s second stake sale in the housing finance behemoth in the past one year.
“Citi has informed us about its intention to sell the stake. Their exit is linked to new capital adequacy rules under Basel III,” Deepak Parekh, chairman of HDFC, told news channels.
Last June, Citi had pruned its stake from 11.4 per cent to the existing 9.85 per cent. The firm had said the reduction in stake was in line with Basel III norms, which required banks to have tier-I capital at seven per cent of the total risk-weighted assets. Citi bought the HDFC stake in two big tranches in 2005 and 2007, industry sources said.
Besides Citi, Carlyle sold a quarter of its stake in HDFC on February 1, raising about Rs 1,350 crore and nearly doubling the money from its 2007 investment in the lender.
| TOP 5 BULK DEALS SINCE 2005 If Citigroup’s 9.85 per cent stake in HDFC fetches Rs 10,200 crore, it would be the biggest bulk deal in the country since 2005 | ||||
| Date | Stake sold in | Stake seller | Price per share | Amount ( Rs cr) |
| Apr 19, ‘11 | CAIRN INDIA | PETRONAS INTERNATIONAL | 331.08 | 9,383.85 |
| Jan 11, ‘10 | RELIANCE IND. | VISHNUBHAI B HARIBHAKTI* | 1,051.73 | 3,470.71 |
| Mar 15, ‘05 | BHARTI TELE | BRENTWOOD INVESTMENT | 218 | 2,441.60 |
| Jul 7, ‘08 | SPICE TELE | MCORPGLOBAL COMMUNICATIONS | 77.3 | 2,175.91 |
| Mar 9, ‘10 | Tata Motors | DAIMLER AG (FDI) | 751.67 | 1,924.01 |
| *ON BEHALF OF PETROLEUM TRUST Data compiled by BS Research Bureau Source: Exchanges | ||||
Citigroup Strategic Holdings Mauritius and Citigroup Holdings Mauritius, which collectively own 9.85 per cent stake in India’s largest mortgage lender, are offering 145.3 million shares at Rs 630-703.55 apiece, according to a term sheet reviewed by Business Standard. The discount will be 0-10.45 per cent to Thursday’s closing price of Rs 700.35.
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The stake sale is likely to happen through multiple bulk deals on Friday. When contacted, an HDFC spokesperson declined to comment. An email query sent to Citigroup’s spokesperson in India remained unanswered.
HDFC shares have risen 7.6 per cent in 2012, compared with a 17 per cent increase in the benchmark Sensex. After losing a quarter of its value last calendar year, the Sensex has gained 17 per cent this year so far, giving investors an opportunity to exit.Warburg Pincus sold about 17.5 million shares in Kotak Mahindra Bank this month through open market deals to raise about $170 million.