Surprising everyone, including the promoters, Citibank, along with its arm Orbitech Ltd, sold little over 14% stake in financial services IT major Polaris Software Lab just in four months after holding the same for more than six years. Effective September this year, Citibank has started off-loading the latter’s shares in the open market in a number of tranches and subsequently brought it down to 28.6% as of December 31 from its peak of 43.3%. This includes a stake sale of 2.4% on December 30.
Though the exact reason for the partial exit in Polaris has not known till date, a market source here pointed out that the US investor has been under pressure for quite sometime due to financial meltddown. As part of its global strategy, Citibank has decided to exit wherever possible but with good margins. Interestingly, the bank has realised over Rs 230 crore by selling more than 14 million shares in the open market with a comfortable margin.
Though the quantum of margin is not known, the bank is likely to have sold the shares at an average share price of Rs 160 to Rs 170. Despite volatile market conditions, the bank could find huge interests from other institutional investors, mutual funds and FIs alike. “There have been nearly 45 to 50 investors, including FIIs and mutual funds, involved in buying the Citi’s stake in the open market over the last four months or so,” a source pointed out.
The shares sold by Citibank were with non-voting rights and the bank is expect to hold the remaining stake at least for sometime before exiting completely. If the bank decides to exit in bulk, Polaris will have a first right to refuse, the source said further.
When contacted, R Srikanth, executive vice-president and CFO, Polaris Software Lab, said “It is a good thing to happen. After years of single major investor, we could see there are number of investors who have said to have bought Citi's shares in the open market. It is good for the company, investors and shareholders alike. It shows the continued investors' confidence on Polaris and its capabilities.”
Source: Financial Express