Carlyle exits HDFC stake with $841 million sale: Source

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Carlyle Group LP has raised $841 million in India's fourth-biggest equity deal in 2012 by selling its remaining 3.7 per cent stake in the country's top mortgage lender Housing Development Finance Corp Ltd (HDFC), said a source with direct knowledge of the deal.

The sale marks the US private equity firm's exit from HDFC after nearly doubling its original 2007 investment of $650 million with this latest sale and one in February that raised $270 million.

The HDFC share sale came after a slew of such transactions in the Indian market since the beginning of 2012 as investors took advantage of stock market gains to reduce their holdings or take profit out of their India portfolio companies.

The Sensex is up nearly 23 per cent so far in 2012.

The index dropped nearly 25 per cent in 2011, making it one of the worst global performers and leaving few options for private equity firms to exit their portfolio companies through IPOs or block deals.

Carlyle sold 57 million HDFC shares at Rs 761.42 each, said the source, declining to be named as details of the deal have not yet been released.

The sale price represents a discount of 3.5 per cent to HDFC's Thursday close.

Buyers of the HDFC shares included a clutch of overseas and Indian institutional investors, the source said, declining to give details.

Officials from both Carlyle and HDFC declined to comment on the deal.

HDFC shares which the market values at about $22 billion were trading down 5 per cent at Rs 749 at 5.17 pm GMT, while the Mumbai market was down 0.8 per cent.

HDFC stock is up about 15 per cent so far this year.

Carlyle, which had raised about $270 million in February by selling a quarter of its stake in HDFC, launched the latest stake sale on Thursday in a price band of Rs 760 to Rs 781.25 a share.

The private equity firm, which manages about $156 billion globally, owned 5.2 per cent of HDFC and was its second-largest shareholder before its February's stake selldown.

Citigroup, which topped the India equity market league table in the January-September period with a 43 per cent market share, was the sole bookrunner for Carlyle stake sale.

Investment banks in India have been betting on sale of large blocks of shares by institutional investors this year to bolster underwriting fees that had been badly hit by fewer large IPOs and follow-on share sales in Asia's third-largest economy.

Total proceeds from share sales in India in the first nine months of 2012 were $8.9 billion from 59 deals, a rise from $8.3 billion in the same period last year, according to Thomson Reuters data.

Earlier this year, Malaysia's state investment arm, Khazanah Nasional, sold shares worth about $105 million in lender Yes Bank.

Others such as Warburg Pincus and Temasek Holdings Pvt Ltd have also cut their stakes in Indian financial companies.