VCCircle

There is an update on this on Saturday's Business Standard. HSBC has actually sold 7.19 per cent stake in UTI Bank for Rs 638 crore ($145 million), bringing down its holding in the private bank to 4.99 per cent. This is done to adhere to the Reserve Bank of India�s (RBI) ownership norms which restrict holding of a foreign bank in a private bank to 5 per cent.

HSBC Asia-Pacific (Holdings) sold 19.9 million shares to Fidelity Funds Mauritius, Crown Capital and Master Trust Bank and a few other funds at an average Rs 318.60 a share against acquisition price of Rs 90. HSBC made a profit of over Rs 460 crore on the deal. In December 2003, HSBC picked up 20 per cent stake in UTI Bank by buying out CDC Capital Partners' holding for Rs 415 crore at Rs 90 a share. So the multiple remains 3.5.

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HSBC Holdings Plc. announced that it had sold a 3.89 percent stake in UTI Bank for Rs 350 crore ($79 million). The shares were sold at an average price of 317.8 rupees each. HSBC had bought the stake in UTI Bank in 2003 at Rs 90 a share from private equity investor, CDC Capital Partners (now Actis). Which means the bank made 3.5 times its money in less than three years. It wasn't bad investment at all.

HSBC originally held more than 14 percent in UTI Bank, which came down to about 12 percent after UTI Bank made a global depositary offering last year. After HSBC sold some 11 million shares today, its stake has come down to about 8.3 percent now.

"It has proved to be a fabulous investment for us," the HSBC spokeswoman said. "We don't have any plans to sell further, but it (the stake) could come down if UTI Bank dilutes further." (Via Reuters)