Global private equity giant, the Carlyle Group and Citigroup will invest in USD 767 million (Rs.3, 114 crore) in the Housing Development Finance Corporation.
The capital would be used by HDFC to expand its life insurance business
and hold its shares in its banking business, the HDFC Bank.
5.63 % of HDFC’s equity capital will change hands, as CMP Asia Ltd. a Carlyle group company, prepares to buy up 1.53 crore shares on a preferential basis.
This entails an investment of Rs.2, 638 (USD 650 million) at the rate
of Rs. 1,730 per share.
As for Citigroup, Rs. 500 crore will be spent to purchase 27.5
lakh shares of HDFC, augmenting its current share of 9.5% stake in the
bank.
This is the first time that HDFC is offloading its shares in
the last 12 years. Meanwhile, its banking arm, HDFC Bank has
plans to raise around Rs. 4,200 crore (USD1 billion), which would dilute
HDFC’s current holding of 23%. Rs. 1,400 crore of the funds from the PE investment would be used to maintain its share in the bank, while Rs.1200 crore would be invested in HDFC Standard Life Insurance.
Rs. 500 crore of the PE funds would be deployed in its own business.
Once the deal with Carlyle is signed, it will be the largest
private equity transaction in India.
