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Bank Muscat To Sell Remaining HDFC Bank Stake; May Make 8x Return

16 June, 2009

Bank Muscat will sell its remaining holding in India’s second largest private sector lender HDFC Bank within a month. In a regulatory filing with the Muscat Stock Exchange, it said that the board has confirmed its intention “to dispose off its remaining 0.5% holding in HDFC Bank. The bank added that subject to market conditions the sale process may conclude within a month.

Bank Muscat held 2.13% in HDFC Bank as of December 31, 2008. In March it sold around 1.7% for Rs 590 crore. The shares which were allotted when Centurion Bank of Punjab(in which Bank Muscat held stake) merged with HDFC Bank was sold with 7x returns on the original investment made in 2003.

The value of its current holding is pegged at around Rs 260 crore. At this price it could end up with 8x returns on its total investment worth Rs 104 crore in Centurion Bank.

Last month Singapore’s DBS Bank had sold its entire 2.7% stake in HDFC Bank for Rs 1,291 crore ($263 million) in an open market transaction. Among those who bought the shares of HDFC Bank (whose promoter firm HDFC is backed by Carlyle) include Deutsche Securities which picked a little less than 1% for Rs 421 crore ($86 million). DBS held the shares for around one year and at best is estimated to have made an exit at par.

Another long term investor Bennett Coleman & Co Ltd (BCCL) is also believed to have exited its investment in HDFC Bank last quarter. The media giant first sold 0.8% out of 2% holding during the October-December quarter pocketing around Rs 300 crore. It had been holding on to the stake for nine years after it was allotted the shares as a result of sale of Times Bank to HDFC Bank.

Its stake came down to 1.26% as of December end and as per the latest available shareholding of HDFC Bank, BCCL does not figure among those having 1% plus as of March end. Either BCCL has completely exited its holding or has sold atleast 0.27% in the bank between January-March 2009.


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Bank Muscat To Sell Remaining HDFC Bank Stake; May Make 8x Return

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