Natwest Mkts To Sell 20% Stake In Hdfc Bank
Natwest Markets has decided to sell its 20 per cent stake in HDFC Bank with which it has a strategic alliance as its has got out of all equity investment in Asia after the south east Asian crisis.
According to Deepak Parekh, Chairman, Housing Development Finance Corporation, "Natwest Mark ets wants to sell its stake in HDFC Bank and they have conveyed this to us.
Both Natwest Markets and HDFC are looking for a suitable candidate to pick up this stake."
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Natwest Markets can now sell its stake as the lock in period of five years has expired in May.
HDFC which has promoted HDFC Bank holds 25 per cent stake in it and has the first right of refusal.
The HDFC chairman stated that the sale of Natwest Markets is not one of distress and it is not in a hurry to get out.
Natwest Markets has conveyed to HDFC that it will not leave the bank in a lurch and said it will look for a suitable partner.
It has not yet been decided at what price Natwest will sell the stake.
Says Parekh, " right now it is a little premature to take a view on pricing. This will be finally decided at the time of the sale."
Sources point out that the sale of its stake in HDFC Bank will prove to be very profitable for Natwest Markets.
Natwest Markets had invested Rs 40 crore for its 20 per cent strategic stake in HDFC Bank.
The share picked up at par was traded at Rs 70 in the secondary market on Friday, which puts the value of Natwest Markets' stake at around Rs 290 crore.
However, the exchange rate will be against Natwest Markets when it sells its 20 per cent stake in the bank and seeks to repatriate the money abroad.
This is so as the rupee has depreciated substantially over the past five years. Currently, it is ruling at over 41.70 to a dollar.
In fact, HDFC itself can pick up at least part of the stake in case the issue comes to a crunch.
Under the Reserve Bank of India guidelines, promoters of banks can hold a stake of up to 40 per cent.
Therefore, HDFC which has a 25 per cent stake in the bank can pick up another 15 per cent if it desires from Natwest
HDFC Bank has been a slow starter of the block but has made steady and strong progress.
The pulling out of Natwest Markets is not expected to make any substantial difference to the bank given the latter's strong parentage in HDFC, one of the country's leading housing finance companies.
That apart the alliance between HDFC Bank and Natwest Markets was only a strategic one to tap each other's experience.