ICICI Bank sells 5.4% stake in 3i Infotech

ICICI Bank, last week, sold 5.37 per cent stake in 3i Infotech (formerly ICICI Infotech) to the Life Insurance Corporation of India (LIC) and a few other investors for nearly Rs 42 crore.

Analysts tracking the country's largest private sector bank said the move was in conformity with its plan to exit from 3i Infotech in course of time.

3i Infotech, which was the software development arm of ICICI Bank, was spun off into a separate company a couple of years ago. It was listed last year.

ICICI Bank CEO and Managing Director K V Kamath had earlier spoken about unlocking the value of infotech ventures of the bank by taking them to the market.

ICICI Bank sold 17.64 lakh shares on June 29 and another 10.84 lakh shares on June 30 for Rs 148.70 apiece. Stock market sources said LIC had bought the shares on June 29.

But the identity of the buyer on June 30 could not be ascertained, though the sources said it might be one of the domestic institutions.

At the second phase, the bank plans to cash out its stake periodically, as it considers the investment in these companies as financial investments.

It has also partly sold its stake in ICICI Oncesource "� the unlisted business process outsourcing outfit. The bank has also been selling its holdings in Federal Bank and South Indian Bank.

However, the trigger for sale in these cases was regulatory requirement. The Reserve Bank of India norms do not allow a commercial bank to hold a substantial stake in another bank.

At today's close of Rs 148.40 on the BSE, the market capitalisation of 3i Infotech stood at Rs 787 crore. ICICI Bank, along with ICICI Strategic Investment Funds, held 54 per cent stake in 3i Infotech on March 31, 2006.

While holding of domestic institutions was 9.44 per cent, the public shareholding was at 20.74 per cent. Sources close to the bank said ICICI Bank would get out of this company fully at an appropriate time.