Citigroup completes HDFC share sale

Citigroup completes HDFC share sale

Mumbai: Citigroup Inc. sold 9.85%, or 145.3 million shares, of Housing Development Finance Corp. Ltd (HDFC) on Friday at Rs657.56 per share for $1.9 billion at the current exchange rate, the US-based financial group said in an emailed statement.

“(The sale) resulted in a pre-tax gain of $1.1 billion (Rs5,490 crore) to Citigroup, and an after-tax gain of approximately $722 million (Rs3,550 crore)," the release said. “The sale of Citi’s remaining stake in HDFC is part of Citi’s ongoing capital planning efforts."

US-based asset management company Waddell and Reed Financial Inc. and Swiss banking group Vontobel Holding AG were among the large investors in the sale, a person familiar with the matter said. “There are at least a dozen investors who have taken stake. Some of them already held shares and just increased their holding," the person added.

HDFC shares dropped 3.45% to Rs676.20 apiece on BSE on Friday. The benchmark Sensex index fell 0.86%.

Other investors included US-based financial services company Oppenheimer Holdings Inc., Swiss banking group UBS AG and Franklin Templeton Investments, according to the person cited above. Oppenheimer holds 1.97% in HDFC through Oppenheimer Developing Markets Fund, according to HDFC’s shareholding pattern on BSE.

None of the companies mentioned could immediately be reached for comment.

Tarun Sisodia, head of research at Anand Rathi Financial Services Ltd, said the demand for HDFC shares is an indication of the easy liquidity situation in developed markets.

“Foreign institutional investors have new money flowing into their funds, which they can invest, but Indian mutual funds are either seeing outflows or they are overweight on HDFC and cannot buy more shares. This has been reflected in this sale," he said.

Pramit Jhaveri, chief executive officer of Citi India, said the bank is “pleased" with the results of its investment in HDFC.

“We will continue to value our long-standing relationship with the company. Citi remains deeply committed to India and we continue to focus on growth opportunities for our franchise in this very important market," he added.

Citi had raised its stake in HDFC by buying 9.3% from UK insurer Standard Life Plc for 3,020 crore in June 2006. The sale of its remaining stake in the mortgage lender had been speculated upon after Citigroup sold a 1.5% stake in June 2011 to take its holding below 10% to comply with Basel III banking requirements.

Citibank employs 8,000 people in India with 42 branches and $29 billion in assets as of 31 December.

joel.r@livemint.com

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Also Read |Citigroup to exit HDFC for up to $2.1 bn

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