Citigroup to Exit India’s HDFC With $2.1B Sale By Adam Haigh and Ruth David - Feb 23, 2012

Citigroup Inc. (C) will sell its remaining stake in Housing Development Finance Corp., India’s largest mortgage lender, for as much as 102 billion rupees ($2.1 billion), a term sheet obtained by Bloomberg News showed.

The bank is offering 145.3 million shares at between 630 rupees and 703.55 rupees apiece, as much as 10.45 percent on its closing price in Mumbai yesterday, the document showed. The stake represents the lender’s 9.9 percent holding in HDFC.

Citigroup, the third-largest U.S. lender by assets, said in June it was reducing its HDFC stake to 9.9 percent from 11.4 percent ahead of the adoption of Basel III capital rules. Citigroup joins banks including Goldman Sachs (GS) Group Inc. and Bank of America Corp. that are selling holdings in Asia investments to boost capital and meet regulatory requirements for risk buffers.

“When the economy is on an uptrend, investors don’t usually sell stakes in financial companies because they are the first to benefit,” said D. K. Aggarwal, chairman of New Delhi- based SMC Wealth Management Services Ltd. “The sale is possibly because of Citigroup’s own strategic reasons,” he said in a phone interview.

Shannon Bell, a spokeswoman for Citigroup in New York and Debasis Ghosh, a spokesman for Citigroup in Mumbai, declined to comment. An HDFC (HDFC) spokesman couldn’t be reached. Shares of HDFC fell 0.1 percent to 701.3 rupees in Mumbai. HDFC has gained 7.6 percent in 2012, compared with a 17 percent increase in the benchmark BSE India Sensitive Index. (SENSEX)
No Sale Plans

Citigroup “has no plans to sell any additional shares of HDFC,” the New York-based bank said when it reduced its HDFC stake in June.

In November, Goldman Sachs raised $1.1 billion selling shares of Industrial & Commercial Bank of China Ltd., two people familiar with the matter told Bloomberg. Bank of America said it would sell 10.4 billion shares of China Construction Bank the same month, for a profit of about $1.8 billion.

Carlyle divested 20 million shares in HDFC for 677 rupees apiece, or about 13.5 billion rupees ($273 million), a person with knowledge of the sale told Bloomberg on Feb. 1. The price was at a discount of 3 percent to HDFC’s Jan. 31 closing price.

Citigroup is managing the share sale. Indian companies raised 296 billion rupees in domestic equity offerings in 2011, a third of the amount raised the previous year, according to data compiled by Bloomberg.

To contact the reporters on this story: Adam Haigh in London at ahaigh1@bloomberg.net; Ruth David in Mumbai at rdavid9@bloomberg.net

To contact the editor responsible for this story: Edward Evans at eevans3@bloomberg.net
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