After diluting its stake in Chennai-based mid-cap outsourcing firm Polaris Software Lab Ltd, Citibank has now started offloading its non-strategic interest in another small-cap software firm, Tanla Solutions. Citi has so far sold a tad lower than 2% stake in the Hyderabad-based telecom, mobile and payment services provider Tanla Solutions in different tranches in the open market. The price at which Citi had sold Tanla shares is not immediately known.
Saddled with “toxic assets”, estimated to be worth $305 billion, on its balance sheet following the US financial meltdown, analysts see Citi’s move in sync with its global strategy of improving cash flow by divesting non-strategic investments in companies the worldover, including India. Citi, through its wholly-owned arm Orbitech Solutions, had earlier sold a tad lower than 4% stake in Polaris to bring its total holding in the Chennai-based outsourcer from 44.74% to 39.56%.
“Citi’s strategy is to offload their non-strategic investment in tranches in the open market whenever the price goes up. A sudden sell-off of its entire holding in companies will do more harm than good both for Citi, as well as the company, as it would trigger broad based sell-off in the stock leading to a price crash,” said an analyst with a local brokerage house, who did not wish to be named. He added, “That is why Citi is diluting its stakes in doses.”
As per information available with FE, Citigroup Global Markets (Mauritius) Ltd sold close to 1.59% stake in Tanla Solutions between the September quarter and November 26. This has brought the total holdings of Citi in the Hyderabad firm to 3.19% from 4.78% at the end of the September quarter. Citigroup was originally holding 8.75% stake in Tanla Solutions.
Promoters Udayakumar Reddy Group is holding 36.26% stake in Tanla Solutions at the end of the September quarter. The other major stakeholders in the company include Swiss Finance Corporation (1.05%), Kotak Global Trust (1.19%), Shinse UTI Fund (Mauritius) Ltd (1.39%), Pythan Investments (1.59%), Kummana Gayathri Reddy (1.75%), ABN Amro Bank (2.25%), Capthal Mauritius Investments (3.31%), Merill Lynch Capital Markets (3.35%), Kuwait Investment Authority (3.91%) and Monika finance (4.30%).