In continuation of its calibrated exit from non-core assets world over, the Citigroup and its subsidiary recently pared 2% stake in its Indian IT vendor company, Polaris, bringing the former’s overall holding to 21.5%from 23.51%. However, Citi stake sale does not have any bearing on its operational interest in Polaris, according to analysts tracking the stock. Polaris derives close to 40% of its business from Citi.
Citi and its subsidiary Orbitech has sold 2% stake in Polaris within a span of 10 days at a price of Rs 185 per share. Since the onslaught of global financial crisis in 2008, it is the strategy of Citi to exit from non-strategic assets to generate additional cash flow.
“Citi’s interests are divided between operational and investment in major Indian companies. Though it continues to offload its stakes at the investment level, it very much maintains its relationship at the operational level. This is evident from the Citi’s BPO arm e-serve’s sale to TCS in 2008, in which Citi sold the entity for $505 million, but in the same token awarded the operations contract to TCS for a period of 9.5 years for $2.5 billion,?Polaris CFO R Srikanth told FE. TCS analogy could be extended to Polaris where Citi is found to be providing 40% business to the overall revenue.
Sanil Kumar of Geojit Financial Services said, “Markets in bull phase is the right time for the maximum exit and I read it purely as an exit move.?