The UK-based hedge fund, TCI Cyprus Holdings Ltd, has sold a majority of its stake in the Chennai-based public sector bank, Indian Overseas Bank (IOB). According to market sources, TCI has sold a major chunk of its shares in IOB to public sector insurer Life Insurance Corporation of India (LIC). The UK-based hedge fund has been quite active in the Indian stock market since last year and has been holding 9.14% stake in IOB. It has offloaded close to 6.5% stake in IOB in the open market.
TCI had picked up stakes in at least eight public sector banks including State Bank of India (SBI), Punjab National Bank (PNB), Union Bank of India (UBI), Vijaya Bank, Oriental Bank, Bank of Baroda, and Bank of Maharashtra last year. So far, the UK-based hedge fund has diluted its stake in five banks – PNB, UBI, Oriental Bank and Bank of Baroda besides IOB.
Market sources told FE that the UK hedge fund has sold as much as 3,53,63,437 shares of IOB at a price of Rs 36.50 per shares fetching it a total amount of close to Rs 129 crore in separate block deals clinched on both
The Stock Exchange, Mumbai (BSE) and the National Stock Exchange (NSE). On NSE it has sold 2.25 crore shares on March 9th of which 1.5 crore shares were pic- ked up by the LIC at a price of Rs 36.50. On the same day, TCI has sold another tranche of 1,28,63,437 shares on BSE at the same price in another block deal. However, the buyer is not immediately known.
Enam Securities had reportedly advised TCI on both the deals. IOB stock closed on NSE on Friday at Rs 43.30, up by 7.18%. The stock has an yearly-high of Rs 156.40 and an yearly-low of Rs 37.50.
Analysts say, TCI had picked up stakes in the public sector banks purely as a financial investment and had no strategic intent. ?Typical of hedge funds, TCI bought the safe stocks in the dips and encashed its investments when the prices looked up. It had partly diluted its stake in PNB quite recently?, an analyst with a foreign brokerage house who does not wanted to be named said. LIC has been already holding 4.24% stake in IOB as of the end of December quarter and with current acquisition its total stake would go up to 6.60%. The other major shareholder in IOB is Citibank Global which holds 1.29% stake. The government of India holds 61.23% stake in IOB. As of the quarter ended December 2008, IOB had earned a total income of Rs 3,204.9 crore and netted a profit of Rs 388.4 crore.