HDFC mulls selling Rs 40,000 cr non-core investments

Financial sector conglomerate HDFC is planning to monetise some of its non-core investments over the next 6-12 months to garner a windfall gain of as much as Rs 40,000 crore.

The plans for monetising its non-core investments -- economic interests held by HDFC in businesses not central to its main activities like housing finance, banking, insurance and mutual fund, were disclosed by the top management at a recent investor roadshow in the US.

CLSA, which hosted HDFC's top management comprising Chairman Deepak Parekh, Vice Chairman and CEO Keki Mistry and MD Renu Sud Karnad, today said in a report that HDFC was planning to sell some of its non-core investments.

"HDFC plans to monetise some of its non-core investments over the next 6-12 months and as this would drive treasury gains. The total unrealised gains on investments are estimated at about Rs 40,000 crore," CLSA said.

HDFC's main business is to provide loans for the purchase or construction of residential houses. One of its group companies, HDFC Bank, is the country's second-largest private sector lender.

HDFC has a market value of close to Rs 1,00,000 crore and had revenues of over Rs 11,000 crore in last fiscal.

In addition, HDFC has invested in a host of other listed and unlisted companies. Its total investment in such unlisted companies stood at nearly Rs 360 crore at the end of last fiscal at the cost value.

Besides, the total investment at cost value in listed companies stood at about Rs 850 crore as on March 31, 2010.

HDFC's latest annual report names Andhra Cements, BHEL, Castrol India, EIL, HUL, ICICI Bank, Indian Oil, IDFC, L&T, M&M, NMDC, RCOM, RIL, REC, Siemens, SBI, TCS and Tata Steel as the listed companies with investments by the company.

The unlisted companies with HDFC investment, as on March 2010, included ARCIL, CIBIL, Feedback Ventures, IL&FS, Lafarge India, Mahindra First Choice Wheels, SKR BPO Services, Chalet Hotels, Computer Age Management Services (CAMS), NSE and Maruti Countrywide Auto Financial Services.

Earlier, HDFC has talked about listing its life insurance arm and is awaiting regulatory framework for the same.

CLSA report also said that HDFC might plan for an IPO of HDFC Life Insurance once the foreign direct investment (FDI) cap is relaxed from 26% to 49% in the sector and insurance regulator IRDA issues listing guidelines.

There have also been talks of HDFC looking at transferring all its investments in non-subsidiaries to a separate company to help it unlock value from the non-core assets.