Citigroup aims for $2.1bn boost as it cashes in on stake in Indian lender
CITIGROUP is set to join the ranks of financial services companies cashing in on the lucrative Indian market by selling its stake the nation’s top mortgage lender.
It wants to raise up to $2.1bn (£1.3bn) to shore up its capital base by selling its 9.9 per cent shareholding in India’s Housing Development Finance Corp. The deal will be the largest share sale in the emerging market nation this year and comes after investors such as Carlyle cut their stakes in Indian companies.
Indian’s main stock market index has risen nearly 17 per cent this year. Jagannadham Thunuguntla, head of research at SMC Global Securities, said: “The rally since the beginning of this year has opened a window of opportunity for investors to book strong profit on their holdings. Many such exits will happen in the next couple of months.”
Citigroup has launched the process to sell about 145m shares, or a 9.9 per cent stake, in HDFC for between 630 and 703.55 rupees per share, sources said.
The lower end of sale price range represents a discount of 10 per cent to the closing price of HDFC yesterday.
Citi, which last month posted an 11 per cent decline in fourth quarter profits, has to boost its capital base to meet new global banking rules.
America’s third-largest bank was bailed out by the US government during the financial crisis but has since repaid the investments.
It is due to satisfy the last $38bn of obligations guaranteed by the Federal Deposit Insurance Corporation later this year.