Subprime mess-affected Citigroup is considering the sale of its 12.7 per cent shareholding in India’s Housing Development Finance Corporation (HDFC), reports The Sunday Times of UK. The stake sale is likely to fetch approximately $2 billion, the report added. Going by price at which HDFC was trading today at 11 am (Rs 2,070), the stake is valued around $1.73 billion.
Citigroup had acquired 12.3 per cent in HDFC for an investment of around $1 billion. Citigroup had picked up 9.27 per cent stake in HDFC for around $671million in May 2006 from Standard Life, HDFC’s JV partner in in the its insurance business HDFC Standard Life. Citigroup had also picked up an additional 0.97 per cent stake in HDFC for about $117 million last year. These were issued at Rs 1,730 a share.
Citigroup holds 10.08 per cent through Citigroup Strategic Holdings Mauritius Ltd, out of which 0.97 per cent are in the form of locked in shares. The other 2.63 per cent is held by Citigroup Holdings Mauritius Ltd. It is the biggest institutional shareholder in HDFC. Carlylye Group also has 5.6 per cent stake which it picked up with Citigroup in 2007 for $650 million.
Citigroup is going through what its newly appointed head Vikram Pandit calls “re-engineering” of the business. The company is planning to lay-off 18,000 workers by end of this year. He has told investors that he can take $15 billion of costs out of the company, with the first chunk coming through job cuts added the report.
Since the sub-prime crisis erupted last year, the group has posted write-downs around $40 billion. It is expected to add a further $8 billion in the second quarter results, which are to be announced on July 18. Citigroup has already raised more than $50 billion in recent months to shore up its balance sheet.
HDFC’s key associate and subsidiary companies include HDFC Bank, HDFC Standard Life Insurance Company Ltd, HDFC Chubb General Insurance Company, HDFC Asset Management Company, HDFC Venture Capital Ltd, and Intelenet Global Services Private Ltd.