Citi may sell HDFC holding

Tue, Jul 8 01:05 AM

Citigroup, the largest shareholder in India's leading mortgage company HDFC, is exploring the option of selling its stake, The Times reported on Monday. If the deal happens, Citi, which holds 11.74 per cent in the mortgage company, will get a valuation of Rs 6,857 crore based on the current share price of HDFC, which closed at Rs 2,005 on the Bombay Stock Exchange (BSE) on Monday.

Citi and other global financial services firms, battered by the US sub-prime crisis, have been looking to sell their assets to shore up their capital. "The Times says that over the next few days Citi will begin signing off second-quarter results that are expected to reveal further write-downs of at least 4 billion pounds," India Abroad News Service (IANS) said quoting the Times report.

Although Citi has raised more than $50 billion in new capital to repair its balance sheet, analysts believe it will need even more new cash to see it through the crisis, according to the Times. Ajay Banga, head (Asia), Citigroup, who was in Mumbai two weeks ago, is understood to have met a few prospective buyers, investment banking sources said.

US-based private equity fund Carlyle holds a minority stake in HDFC. "Some private equity funds like Carlyle have enough funds," said a Mumbai-based investment banker, requesting anonymity. HDFC Chairman Deepak Parekh, however, said: "We have a very good relationship with Citigroup.

I am not aware of Citigroup's move to sell its stake in HDFC." In a preferential offer in May 2007, Citigroup increased its stake in HDFC by 0.97 per cent at a price of Rs 1,730 a share. Exactly a year before that, it had bought over Standard Life's (HDFC's partner in a life insurance venture) stake of 9.27 per cent at an estimated value of Rs 2,885 crore.

RECOMMEND THIS STORY