Global banking giant Citigroup has sold its entire 9.85 percent stake in the country’s biggest housing finance company, Housing Development Finance Corporation (HDFC), for Rs. 9,550 crore ($1.9 billion).
Amarchand Mangaldas advised Citigroup with a team led by Managing Partner Cyril Shroff along with Partners Yash Ashar and Nivedita Rao.
Paul, Weiss, Rifkind, Wharton & Garrison acted as International legal advisor to Citigroup. The team included Corporate Partner David Lakhdhir, Securities and Capital Markets Cohead Mark Bergman and Corporate Counsel Patrick Scott.
The sale gives a pre-tax gain to Citigroup of $1.1 billion (Rs 5,490 crore), and an after-tax gain of approximately $722 million (Rs 3,550 crore), reports VCCircle.
According to Dealcurry, the US bank wants to boost its capital base to meet Basel III banking regulations that will take effect at the start of next year. Citigroup is selling 145.2 million shares representing 9.85 percent of the total equity of HDFC at Rs. 630-703.55 per share.
In 2006, Citigroup had acquired 9.3 percent stake for around Rs. 2,900 crore from Standard Life - HDFC's life insurance partner and it was subsequently increased to 11.4 percent. According to AMLAWDaily, Paul Weiss had also advised on the bank's original purchase of a stake in HDFC, in 2006.
Last June, Citigroup has sold 1.5% stake in HDFC Ltd for around Rs.1061 crore, to comply to Basel III capital rules. It sold 1.65 crore shares of HDFC at Rs. 643 per share in block deal. The transaction resulted in a pre-tax profit of around $160 million. The move by Citi was aimed at bringing down its holding in HDFC to below 10 percent in order to avoid setting aside additional capital under the new international Basel-III agreement on bank capital requirements.
Earlier this month, Luthra & Luthra Law Offices had advised Deutsche Bank on the block trade sale where Carlyle group sold 0.85 percent stake in HDFC at the BSE. The deal was led by Luthra Partner Madhurima Mukherjee.
The Carlyle group had 5.22 per stake in HDFC. The private equity firm CMP Asia sold 20 million shares of the company at an average price of Rs. 677.21 a share, amounting to Rs. 1354 crore, aggregating to about 1.3 per cent stake in the company through an open market transaction. With this, US-based private-equity firm Carlyle Group reduced its stake to about 3.9 percent in the leading mortgage company HDFC.