China’s central bank takes advantage of falling HDFC share price, buys Rs 3,000 crore shares

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Updated: April 13, 2020 1:39:24 PM

India’s biggest mortgage lender, HDFC announced a surprise shareholder in a disclosure to the stock exchanges on Sunday, the People’s Bank of China.

Since the beginning of the year, HDFC’s share price has tanked 36% making the valuation attractive for PBOC.

India’s biggest mortgage lender, HDFC (Housing Development Finance Corporation) announced a surprise shareholder in a disclosure to the stock exchanges on Sunday, the People’s Bank of China (PBOC). According to the data provided by HDFC to the stock exchanges, the Chinese central bank holds 1.75 crore shares of the company at the end of March 2020.  At current prices, the value of PBOC’s holding is close to Rs 3,000 crore. The move has come as a surprise for many, however, HDFC’s CEO Kikey Mistry while talking to CNBC TV18 on the issue, said that PBOC is not a new shareholder and that the Chinese central bank has held 0.8% share of HDFC since March 2019. 

Since the beginning of the year, HDFC’s share price has tanked 36% making the valuation attractive for PBOC. HDFC is down more than 32% from its 52-week high.  HDFC has over 70% investment coming in from foreign portfolio investors (FPI). Invesco Oppenheimer holds 3.33% in Housing Development Finance Corporation, while Life Insurance Corporation of India holds 4.67%, according to the latest shareholding pattern. The Government of Singapore is another major shareholder in the financier with over 3.2% shareholding. 

PBOC has a history of acquiring stakes in foreign companies. Back in 2014 PBOC bought stakes in a number of Italian firms, including insurance firm Generalli, car company Ford, oil and gas major Eni and many more during the Eurozone debt crisis. The bank also acquired a stake in the UK’s third-largest gas producer BG Group in 2007.

According to listing regulations, companies are only required to declare holdings of any shareholder, with over 1% shares of the company. While the Chinese Central Bank might have been a long-term shareholder, the name did not surface in the shareholding pattern in the past few quarters as the holding was below 1%. 

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