Natwest Plans Stake Sale In Hdfc Bank

Natwest Markets is considering sale of its 20 per cent stake in HDFC Bank with which it has a strategic alliance. This will be part of Natwest Markets on-going exercise of winding down equity operations following the south-east Asian crisis.

Deepak Parekh, chairman of the Housing Development Finance Corpor-ation said: We have not yet received a notice from Natwest Markets that they want to sell their stake in HDFC Bank. But we feel that they will sell the stake as part of their winding down of equity operations in south east Asia.

Sources say that Natwest Markets will definitely sell its stake in HDFC Bank as it is slowly getting out of India. However, it cannot sell its stake immediately as Natwest Markets has a lock-in period of five years which expires in May.

 

As and when it wants to sell, HDFC -- which has a 25 per cent stake in HDFC Bank -- has the first right of refusal. Officials at Natwest Markets could not be contacted.

Sources point out that the sale of its stake in HDFC Bank will prove profitable for Natwest Markets which had invested Rs 40 crore for its 20 per cent stake.

The share picked up at par was traded at Rs 67 in the secondary market yesterday, which puts the value of Natwest Markets stake at around Rs 270 crore.

However, the exchange rate will be against Natwest Markets. The share price of HDFC Bank has fallen over the past week from around Rs 72 to Rs 67 as a leading foreign institutional investor (FII) holding about five per cent in HDFC Bank commenced offloading its stake.

Aditya Puri, managing director of HDFC Bank said: We have not yet got a notice from Natwest Markets that it will sell its stake, but even if it does sell it will not affect our operations here as we have only a strategic alliance.

HDFC Markets handles the Indian operations and Natwest Markets provides the technological inputs and provides HDFC clients with an access to foreign markets.

Says Deepak Parekh, In case, Natwest Markets sells we will see what the price is then and decide if we want to pick up a stake.

Under the Reserve Bank of India (RBI) guidelines, promoters can hold a stake of 40 per cent and hence HDFC which has a 25 per cent stake can pick up another 15 per cent.

According to Parekh as regards the balance HDFC might look out for another strategic alliance or even go for a Global Depository Receipts issue to place the stake. If HDFC decides to pick up more than 10 per cent of the stake offloaded by Natwest Markets, it will not trigger the takeover code, sources point out.

HDFC Bank has been a slow starter but has made steady progress.

The pulling out of Natwest Markets will not make a difference to the bank due to the strong parentage in HDFC. But the stock prices have been falling on the likelihood of Natwest Markets pulling out.