Orbitech Ltd, part of the troubled global financial giant Citibank NA, has sold close to 4% stake in the mid-sized IT firm Polaris Ltd, based in Chennai, in tranches in the open market.
Citi, which took a huge hit during the subprime crisis, has been gradually offloading its non-strategic investments through its various investment arms, including Orbitech, to improve its global cash flow and keep its business going. Citi had over $305 billion in ?toxic assets? on its balance sheet.
?It (Citibank) has been gradually offloading its non-strategic financial investments in different companies since the US mortgage crisis to enhance its cash position. The improvement in the market sentiments with the Sensex hovering around the 17,000 mark after a long gap, it is timely for Citi to liquidate its non-strategic investments at higher levels,? said an analyst with a foreign fund house.
According to market sources, Orbitech has sold 37,76,417 shares of Polaris last week in different tranches through the bulk deal window on the National Stock Exchange (NSE) at a tad over Rs 150 a share carrying a face value of Rs 5 each per share. According to information available with FE, Orbitech had sold 13,33,891 ordinary shares of Polaris at a price of Rs 150.97 on September 24 this year, another 12,90,000 shares at a price of Rs 152.48 per share on September 29, and 6,88,550 shares at a price of Rs 151.23 per share on September 30. This translates into roughly 3.82% of the total voting capital of the Chennai-based Software firm.
Citi, through its various investment arms, mainly Orbitech, was holding 44.74% stake in Polaris as on June 2009. After the stake sale, the group?s holding in Polaris had come down to 3,90,45,067 fully-paid equity shares of Rs 5 each which translates into 39.56% of the total voting shares of Polaris.
?This is the best price that Citi can ask for Polaris shares at the current market levels,? an analyst contacted by FE pointed out. The stock had an yearly high of Rs 158.95 and a yearly-low of Rs 25.20. The Polaris stock closed on BSE at a higher level on Monday despite the Sensex loosing its upward spiral by shedding over 258 points.