Smart investors including promoters and private equity firms are using the reform-driven rally to exit their huge investments at handsome profits.
The Sensex has gained over 1,750 points or 10% in September, riding on huge foreign institutional investor flows, who have brought in over Rs 21,500 crore during this period. This boom in prices has allowed couple of smart investors to exit their stakes.
On Friday, US private-equity firm Carlyle Group raised around $841 million by selling its 3.7% stake in India's top mortgage lender Housing Development Finance Corp Ltd.
Carlyle sold 57 million HDFC shares at Rs 761.42 according to agency reports. The sale price represents a discount of 3.5% to its Thursday close. HDFC shares were trading 4.77% below their previous close.
Carlyle had earlier raised about $270 million in February by selling a quarter of its stake in HDFC. With this sale, Carlyle has exited HDFC.
This is the second large transaction of foreigner selling in the last few days.
Last Tuesday, UK’s Cairn Energy plc said it has sold 8% stake in Cairn India, raising $910 million.
The rising rupee value is an icing on the stock market gains for the foreign investors. On top of the 10% rise in stock indices, the Indian currency has rallied from 56 levels to 52 levels against the dollar, which means more dollars for investors who sell their rupee investments.
This year has seen several deals where FDI investments have exited.
In February, Citigroup raised over $1.5 billion by selling its holding in HDFC. It had sold over 145 million shares at a price of Rs 658 a piece.
Yes Bank saw some FDI stake dilutions by Rabobank and HSBC IRIS in April and June, respectively.
British Telecom sold 6 million shares in Tech Mahindra in August.
| Some of the prominent FDI stake sales in 2012 | |||||
| Company | Transaction date | Seller | Quantity (mn shares) | Price (Rs) | Value ($m) |
| Axis Bank | 28-Jun-12 | HSBC IRIS Investments Mauritius Ltd | 20 | 958 | 348 |
| Cairn India | 29-Jun-12 | Cairn UK Holdings Ltd | 33 | 309 | 191 |
| 25-Sep-12 | Cairn UK Holdings Ltd | 153 | 325 | 919 | |
| HDFC | 24-Feb-12 | Citigroup Holdings Mauritius Ltd | 16 | 658 | 192 |
24-Feb-12 | Citigroup Strategic Holdings Mauritius Ltd | 129 | 658 | 1,577 | |
| Tech Mahindra | 30-Aug-12 | British Telecommunications Ltd | 6 | 778 | 81 |
| Yes Bank | 26-Apr-12 | Rabobank International Holdings | 12 | 357 | 79 |
| 28-Jun-12 | HSBC IRIS Investments Mauritius Ltd | 17 | 325 | 101 | |
Source: Kotak Institutional Equities
