Global banking major Citigroup Inc. has exited India’s largest mortgage lender Housing Development Finance Corp Ltd (HDFC), selling its 9.85 per cent stake through block deals on Friday. The shares were sold for over Rs 9,551 crore or $1.9 billion as per current exchange rates.

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),” according to a Citigroup statement. “The sale of Citi’s remaining stake in HDFC is part of Citi’s ongoing capital planning efforts,” it added. In June 2011, Citigroup sold 1.5 per cent stake in HDFC to bring its holding down to 9.9 per cent in order to meet the Basel III capital rules.

At 1:43 pm, shares of HDFC were trading at Rs 671.70 a unit on the BSE, down 4.09 per cent. Citigroup sold its stake at Rs 657.56 per share, a discount of over 6 per cent to Thursday’s closing price of Rs 700. The shares have been picked up by FIIs.

Citigroup’s move comes three weeks after private equity major Carlyle Group sold one-fourth of its stake in HDFC for Rs 1,355 crore. The PE firm sold its stake at 2x and still holds over 3.5 per cent stake.

In May 2006, Citigroup acquired 9.27 per cent stake in HDFC, from its life insurance partner Standard Life. The UK-based firm sold its stake in HDFC for Rs 3,020 crore as it was facing financial problems at home. Citigroup had already built 3-4 per cent stake in HDFC at that point of time.

In 2007, along with the private equity major Carlyle Group, Citigroup participated in the Rs 3,114 crore ($767 million) investment in HDFC.

As of March 2011, Citi held 11.38 per cent stake in HDFC through Citigroup Strategic Holdings Mauritius (8.83 per cent) and Citigroup Holdings Mauritius (2.55 per cent). Carlyle now holds 5.25 per cent stake and its average investment price comes at Rs 344 per share.

“We are pleased with the results of our investment in HDFC and will continue to value our long-standing relationship with the company. Citi remains deeply committed to India and we continue to focus on the growth opportunities for our franchise in this very important market,” said Pramit Jhaveri, chief executive of Citi India.

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