Singapore’s sovereign wealth fund Temasek sold close to half of its stake in India’s second largest lender by the size of balance sheet (and second largest private bank by market value) for Rs 1,472 crore($300 million) through open market transactions on the stock exchange on Wednesday.
A large chunk of the shares were acquired by an investment arm of Goldman Sachs.
Temasek held 39.83 million shares of ICICI Bank representing 3.46 percent stake, as of December 31, 2011, through its unit Allamanda Investments Pte. On Wednesday it sold 15.9 million shares at Rs 924.05 a share.
ICICI Bank scrip declined 1.8 per cent on BSE to close at Rs 919.95 a share today.
The government of Singapore (which operates through two sovereign funds GIC and Temasek) held 5.14 per cent stake in ICICI Bank as of December 2011. After the current sale, its holding has dropped to around 3.7 per cent which is valued at Rs 3,983 crore($813 million).
Indeed, the government of Singapore had been spreading its exposure in Indian financial sector. Last quarter, it had acquired 1.2 per cent in HDFC Bank(the country’s most valued private lender and a strong competitor of ICICI Bank) in what could have cost it around Rs 1,250 crore ($250 million), as per VCCircle estimates.
This investment came even as the Singapore government had been slowly diluting its holding in ICICI Bank. It held over 9 per cent stake few years ago but this had shrunk to a little over 5 per cent at the end of 2011.
The Singapore government has been an investor in ICICI Bank for over nine years now and at one point of time held over 12 per cent stake through separate investment entities including Temasek owned Allamanda Investments.
Temasek first acquired shares of ICICI Bank in the September-December quarter in 2003, when the bank’s share price was in the region of Rs 250. If that is taken as a benchmark, Temasek pocketed over 3.5x returns on its investment, according to VCCircle estimates.
One week ago, two PE giants Carlyle Group and Warburg Pincus had taken advantage of the recent uptick in stock market valuations to cut stake in India’s largest mortgage lender HDFC Ltd and Kotak Mahindra Bank in cumulative deals worth $440 million.
This comes as second big move in India this year by Temasek. Early this year it announced Rs 685 crore($135 million) investment to buy 4.9 per cent stake in consumer products firm Godrej Consumer Products Ltd, in the single largest alternative investment deal in the Indian FMCG industry.
These two deals are the first set of transactions after the leadership change at Temasek in India. Manish Kejriwal, who was heading India office since 2004, left the sovereign wealth fund in late 2011 to start his own PE firm. Rohit Sipahimalani, who joined as managing director (investment) in 2008 from Morgan Stanley, took over after Kejriwal departed.
In 2011, it was busy picking up equity stakes in public listed companies like Max India and Jain Irrigation through open market transactions.
Temasek’s other portfolio companies in India include ICICI Bank, Tata Sky, Bharti Airtel and its tower arm Bharti Infratel, GMR Energy and National Stock Exchange.