Institutional investors are using the recent rally in the stock market as an opportunity to book profits on their investments.
Allamanda Investment— a unit of Singapore state investment company Temasek Holdings, on Wednesday reduced its stake in ICICI Bank by selling 15.9 million shares of the bank in a block deal for Rs 1,469 crore.
On February 1, US -based private equity firm Carlyle group, that owned 5.2% in HDFC before the block deal sold around 20 million shares raising around Rs 1,300 crore.
On the same day, private equity firm Warburg Pincus sold 17.5 million shares of Kotak Mahindra Bank for Rs 875 crore.
“These investors bought the stake in 2007 when the market conditions were good but they got stuck in these companies due to poor market conditions,” said Jagannadham Thunuguntla, head of research, SMC Global Securities.
The shares of ICICI Bank, which fell 40% in 2011, have risen more than 32% in the first month of January. Likewise, shares of HDFC, which fell 11 % in 2011, rose around 7% in the January 2012 while shares of Kotak Mahindra Bank have seen a gain of 15% in the first month of 2011 after declining 5% in 2012.
Allamanda Investments held 39.8 million shares of ICICI Bank representing a 3.5% stake, as of December 31, 2011.
“These firms usually have investment cycle of 3-5 years and are nearing the maturity and the recent rally provided them opportunity to book good return on investment (ROI),” said Avinash Gupta, leader, financial advisory, Deloitte in India. “We may see more such exit in the future if the market maintains its upward momentum,” he said.