Citi said it would likely record an after-tax gain of about $722 million from the sale of its 9.9% holding in Indias biggest mortgage lender. The sale of the HDFC stake is part of the ongoing capital planning efforts, Citi said in a statement.
The bank sold 145.3 million HDFC shares at R657.56 each. The price represents a discount of about 6% to HDFCs closing price on Thursday, when Citi launched the process to sell its stake. Sources had said the bank had invited bids between R630 and R703.55 per share.
The shares were bought by a large number of global funds as well as some local financial institutions, sources said. Citi was the sole bookrunner, they said.
We are pleased with the results of our investment in HDFC and will continue to value our long-standing relationship with the company. Citi remains deeply committed to India. We continue to focus on growth opportunities in this very important market, said Citi India CEO Pramit Jhaveri.
Responding to the development, HDFC vice-chairman and CEO Keki Mistry said: As far as Citi is concerned, you know that how the capital market in the US is evolving and therefore it (stake sale) was necessary at some point for Citi. It was nothing to do with the performance of the company. The HDFC scrip was down 3.45% and lost Rs 24.15 to close at Rs 676.20.
The share sale, the largest in India this year, follows the sale of stakes in other Indian financial firms by international investors including US-based private equity firm Carlyle and Singapore's state investor Temasek in recent weeks.
The sales have coincided with a sharp rise in the share prices of Indian financial companies, which would be among the main beneficiaries of the expected interest rate cuts by the Reserve Bank of India later in the year.
The deal puts Citi at the top of India's equity capital market league table, according to Thomson Reuters data. The bank, which ranked No. 2 in the ECM table in 2011, was not among the top three in the table for 2012 before this transaction.
Citi, which had been the largest shareholder in HDFC, sold a 1.5% stake in June last year in a deal the bank said would give it a pre-tax profit of $160 million.