The U.S. bank is offering 145.3 million shares at 630 rupees to 703.55 rupees apiece, or as much as a 10 percent discount on the closing price of HDFC shares yesterday, according to a term sheet obtained by Bloomberg News. The stake represents the New York-based lender’s remaining 9.9 percent holding in Mumbai-based HDFC.
Citigroup joins European and U.S. banks including HSBC Holdings Plc and Goldman Sachs Group Inc. in selling Asian assets as global rules for higher risk buffers force lenders to boost capital. Citigroup, the third-largest U.S. lender by assets, also plans to raise as much as $20 billion in debt this year to make payments on a 2008 emergency credit program.
“Banks globally are currently under pressure to boost capital, and asset disposals make sense as the current environment makes fundraising from capital markets difficult,” said Lewis Wan, Hong Kong-based chief investment officer of Pride Investments Group Ltd., which manages $250 million of assets. “The fundamentals of U.S. banks and European banks are relatively weaker than that of Asian banks.”
Shannon Bell, a spokeswoman for Citigroup in New York, and Debasis Ghosh, a spokesman in Mumbai, declined to comment. An HDFC (HDFC) spokesman didn’t return two calls to his mobile-phone.
Asian Asset Selldown
Shares of HDFC fell 0.1 percent to 701.3 rupees in Mumbai yesterday. The stock has gained 7.6 percent this year, compared with a 17 percent advance in the BSE India Sensitive Index. (SENSEX)
Citigroup said in June it was reducing its HDFC stake to 9.9 percent, from 11.4 percent, in preparation for meeting the Basel III capital rules. The bank “has no plans to sell any additional shares of HDFC,” it said at the time. The bank is managing the share sale in the latest transaction.
HSBC, Europe’s largest bank, this week told customers it was withdrawing from consumer banking in Japan and closing down six branches. The London-based bank was seeking buyers for its Premier unit, which targets wealthy individuals in the country, three people familiar with the matter said on Jan. 25. The bank has also sold assets in Thailand and Korea.
In November, Goldman Sachs (GS) raised $1.1 billion selling shares of Beijing-based Industrial & Commercial Bank of China Ltd., the world’s most profitable bank. Bank of America Corp. said it would sell 10.4 billion shares of China Construction Bank Corp. the same month, for a profit of about $1.8 billion.
Carlyle Group LP divested 20 million shares in HDFC for 677 rupees apiece, or about 13.5 billion rupees, a person with knowledge of the sale said on Feb. 1. The price was at a discount of 3 percent to HDFC’s Jan. 31 closing price.
Indian companies raised 296 billion rupees in domestic equity offerings in 2011, or less than 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; Stephanie Tong in Hong Kong at stong17@bloomberg.net
To contact the editors responsible for this story: Edward Evans at eevans3@bloomberg.net; Chitra Somayaji at csomayaji@bloomberg.net
http://www.bloomberg.com/news/2012-02-23/citigroup-to-exit-india-s-housing-development-with-2-1-billion-stake-sale.html
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