Even as the market has been rife with rumours that Citi group will sell its stake in housing major HDFC, Deepak Parekh, chairman, HDFC has denied any such move.
Last week, there were media reports that Citi may sell its 11.74% stake in HDFC to Oman Investment Corporation. However, when contacted , Mr Parekh said that there was no such move on Citi’s part to sell its stake.
Citi had picked up a stake in HDFC in 2006. Last year, HDFC had made a preferential issue of Rs 3,114 crore to private equity major Carlyle Group and Citi to increase its stake in HDFC Bank and also help the housing major finance its insurance business and housing business.
The Carlyle Group, through Carlyle Asia Partners (CAP), put in Rs 2,638 crore, while Citigroup Strategic Holdings Mauritius Ltd subscribed to the balance Rs 475 crore. Post the issue, Citigroup will maintain its holding at 12.3% and Carlyle will hold 5.6%.
Currently Citi which is the largest stake holder in HDFC, holds 11.74% stake in HDFC, while Carlyle holds 5.37% stake. Post the sub-prime crisis , rumours have abound about Citi selling off its stake in HDFC. At current market valuations, the HDFC stake would be valued at Rs 6,674 cr ($1.55bn). Citi is said to have initially picked up its 12.3% stake for around $900 mn.
Post the takeover of Centurion Bank of Punjab by HDFC Bank, HDFC’s stake in the bank has fallen. In order to increase the stake HDFC Bank has allotted 2.62 cr warrants convertible into equity shares of the face value of Rs 10 each for cash at a premium of Rs 1,520.13 per share to HDFC on a preferential basis.
This is through the basis of warrants which can be converted over a 18 month period. In order to raise funds for this, HDFC was looking at listing its AMC and insurance company. “We will go ahead with our listing plans depending on the market conditions,” said Mr Parekh. He said that the corporation did not have any plans to dilute its own equity to raise funds.
Citi, which is looking at selling down $400 bn of its assets, sold its German consumer banking business to Credit Mutuel for $7.7 bn. Since last year, Citi has posted over $40 bn of credit losses and write-downs . Analysts are expecting Citi to post over $6bn in writedowns in the second quarter when it reports its results in July 18.
Source: Economic Times