China’s central bank has bought 1.01 per cent stake in HDFC. According to the shareholding disclosures for the March quarter, People’s Bank of China held 1.75 crore shares of India’s biggest housing mortgage lender. The share purchase is likely to have happened between January and March.
The timing of the share purchase is significant given that HDFC shares have been sliding in the recent weeks. Since the first week of February, the shares have fallen by 41 percent from a high of Rs 2,493 to a low of Rs 1,499 last week. The stock rallied 14 per cent last week to close at Rs 1,702 on Thursday.
According to the Economic Times report, on April 3 that China-backed funds are seeking to buy Indian financial assets after the Covid-19 outbreak caused a major slump in the valuation of local companies. HDFC’s Vice Chairman and CEO Keki Mistry told Moneycontrol that the PBOC has been an existing shareholder and had owned 0.8 percent in the company as of March 2019.
The disclosure has been made now since the stake has hit the 1 percent regulatory threshold, Mistry said.
At least two big ticket funds — Industrial and Commercial Bank of China (ICBC) and China Investment Corporation (CIC) – have asked bankers to scout for good investment opportunities in the financial services sector, people with direct knowledge of the matter said. These funds put together are looking to deploy around $600-650 million through the purchases.
China has been buying stakes across major financial institutions in Asia amid the stock market crash in major economies. China, in recent years, has also significantly increased its investments in Asian countries, including Pakistan and Bangladesh, mainly in infrastructure projects and technology companies.
HDFC owns 19.43 per cent stake in HDFC Bank and 52.7 per cent in HDFC Asset Management Company and 51.45 per cent in HDFC Life Insurance Company. HDFC Bank, in turn, owns a 96 per cent stake in HDB Financial services and 98 per cent in HDFC Securities.
(Source: ET, Moneycontrol)