Citigroup has decided to reduce its stake in India's top mortgage lender Housing Development Finance Corp to about 10 percent from 11.4 percent now via stock market deals, two sources with knowledge of the matter said on Monday. The sales prospectus will be given to possible buyers later on Monday, the sources told Reuters, declining to be identified as the matter was not public yet. Citi will remain HDFC's largest shareholder after the deal.
The sources said Citi's decision to pare its stake in HDFC was triggered by the global accord on banking, known as Basel III, that discourages large holdings by banks in other financial institutions. The stake to be sold by Citi is valued at about 13.5 billion rupees ($301 million), based on HDFC's share price as of Monday. Shares in HDFC, which the market values at about $21 billion, closed at 657 rupees, up 0.8 percent.
A spokesman for Citi in India declined to comment, while officials at HDFC could not be immediately reached. Citi bought just under 10 percent of HDFC in 2006 for about 29 billion rupees and has subsequently added to its stake, making it the mortgage lender's top shareholder with a 11.37 percent stake, according to Thomson Reuters data.
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