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Citi sells stake in Indian housing lender for $1.9B

by Laura Board  |  Published February 24, 2012 at 9:47 AM
Citigroup_227x128.jpgCitigroup Inc. said late Thursday, Feb. 23, it had divested its entire 9.9% stake in Indian housing lender Housing Development Finance Corp. Inc. for about $1.9 billion.

Citigroup sold 145.3 million shares on India's National Stock Exchange at a price of 657.56 rupees ($13.40) per share, about 6% less than Thursday's closing price. Shares in the Mumbai company Friday fell Rs27.05, or 3.9%, to Rs674.25, following the transaction, which Reuters said was India's biggest stock offering so far this year.

The New York institution expects a pretax gain from the sale of Rs54.9 billion, or $1.1 million, and a net gain of about Rs35.5 billion, or $722 million.

It said it sold the stake as part of its "ongoing capital planning," adding that it remains "deeply committed to India." The bank has about $29 billion of assets and employs around 8,000 in the country.

"We are pleased with the results of our investment in HDFC and will continue to value our long-standing relationship with the company," said Citi India CEO Pramit Jhaveri in a statement. He said the bank will focus on growth opportunities within India.

Housing Development had an asset base of $ 27.6 billion as of Dec. 31. Before Friday the stock had risen about 12% in the past six months, buoyed, along with other lenders, by expectations of interest rate cuts.

Citigroup sold a 1.5% stake in Housing Development last June, making a pretax profit of about $160 million.

At the time it said it had no plans to sell additional shares and put the disposal down to efforts to meet Basel III rules rather than "strategic considerations." A Citigroup spokesman on the latest Housing Development stake sale couldn't be reached for further comment.

Citigroup first invested in Housing Development in 2005.

Citigroup, led by CEO Vikram Pandit, said last month it had cut noncore assets it houses in its Citi Holding division by $90 billion during 2011 to $269 billion.

The New York bank ended the year with a Tier One capital ratio of 11.8%.
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Tags: Citigroup Inc. | Housing Development Finance Corp. Inc. | M&A

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