Mumbai, Feb. 24: Citigroup today pocketed $1.9 billion by offloading its entire stake in Housing Development Finance Corporation Ltd (HDFC).
The global financial services giant sold 14.53 crore shares, or a 9.85 per cent stake, at a price of Rs 657.56 apiece.
The share sale was done through block deals on the National Stock Exchange. Citigroup said in a statement that the transaction would result in a pre-tax gain of $1.1 billion (Rs 5,490 crore) and an after-tax gain of around $722 million (Rs 3,550 crore).
This is the largest share sale over the past few months.
According to Citi, the stake sale is part of its ongoing capital planning efforts. The financial services entity faces increased capital requirement under the upcoming Basel III norms. However, the stake sale had its impact on the share price of HDFC.
On the BSE, the HDFC share fell 3.45 per cent, or Rs 24.15, to Rs 676.20.
Market circles said the shares were acquired by a mix of domestic and foreign institutional investors. There was a buzz that the treasury division of Reliance Industries Ltd (RIL) acquired some shares, but this could not be verified as RIL officials declined to comment.
Aberdeen, JP Morgan and ICICI Prudential Fund are believed to be among the other buyers.
"We are pleased with the results of our investment in HDFC and will continue to value our long-standing relationship with the company. Citi remains deeply committed to India and we continue to focus on growth opportunities for our franchise in this very important market," Pramit Jhaveri, chief executive officer of Citi India, said.
Sources close to HDFC said the share sale was entirely because of the capital requirements of Citi and had nothing to do with the performance of the corporation.
It is learnt that there will not be much change in the shareholding pattern of HDFC after this transaction.
For the period ended December 31, 2011, FIIs held 59.02 per cent stake in the housing finance company, while domestic institutions had around 28.71 per cent.
In May 2006, Standard Life, the European financial services company, sold its entire 9.27 per cent stake in HDFC to Citigroup for Rs 3,000 crore. Citi subsequently increased its stake to around 12 per cent. Last year, it sold part of its stake, bringing its holding down to 9.85 per cent.
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