October 2009
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Singapore’s Temasek, GIC trim stakes in India’s ICICI

Temasek Holdings and the Government of Singapore Investment Corporation (GIC) have both pared their stakes in ICICI, India’s second-largest lender.

Bombay Stock Exchange filings stated that Temasek trimmed its interest in ICICI to 5.76 per cent as of Sept 30 from 7.6 per cent at the end of June.

GIC cut its stake to 1.53 per cent at the end of last month from 1.66 per cent at the end of June. Collectively, their stakes have been cut from 9.91 per cent in the March quarter to 7.29 per cent as of Sept 30.

It is not known at what price GIC or Temasek sold the shares or how much they profited from the transactions. But based on yesterday’s share price, the sale would have yielded Temasek around 17.53 billion rupees.

Temasek did not disclose the purchase price when it bought a 5.2 per cent stake in ICICI in 2003 but at that time, its stake was worth over S$351 million.

ICICI Bank’s biggest shareholder remains Deutsche Bank Trust Company Americas, with a 29.89 per cent stake at the end of last month.

The collective ownership of ICICI shares by Temasek and GIC has been an issue among some Indian authorities in recent years with some querying whether the two firms would trigger the takeover code if they increased their stakes.

The issue hinged on whether Temasek and GIC should be treated as one entity. The argument went that if both companies were seen as acting in concert and took their joint holding beyond 15 per cent, then the takeover code would apply.

But two years ago, Kamal Nath, the then Indian Trade Minister, said Temasek and GIC could raise their stakes in ICICI Bank to 10 per cent each.

Analysts think the recent divestment has less to do with politics than with a strategy of realigning investments.

“Indian markets have rallied a lot. They should be thinking about taking some profit,” said a banker. ICICI shares have more than doubled this year.

Temasek has also been cutting its holdings in other financial firms. It recently sold its entire stakes in Bank Internasional Indonesia, Bank of America, Barclays and China Minsheng Bank.

Manish Kejriwal, senior managing director and country head for India at Temasek, said: “We are optimistic about the long-term growth potential of Asia, including India, and we’ll continue to build on our investments and portfolio in the region.”

Separately, Temasek said in a statement yesterday that its US$1.5 billion (RM5.1 billion) bond sale this month would set a new pricing benchmark for its debt.

Referring to the sale of the 4.3 per cent, 10-year note by Temasek, Jason Rogers, director of credit research at Barclays Capital Singapore, said the interest rate “could be seen as an indicative level for other Singapore entities when they want to issue debt in international markets”. — The Straits Times

(Malaysian Insider)

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