Indian private sector lender HDFC has divested a 6.1% stake in its home loan subsidiary Gruh Finance through a share sale.
The bank sold shares to meet Reserve Bank of India’s (RBI) requirement to facilitate the proposed merger of Gruh Finance with Bandhan Bank.
In a regulatory filing, HDFC said that the sale was carried out through stock exchanges at the prevailing market price.
The average price was INR260.07 per equity share for those sold on 28 March and INR310.126 for shares sold on 24 May this year.
The divestment involves selling 44,786,774 equity shares of Gruh.
Overall, HDFC sold 1.66% stake in its subsidiary in March and the remaining 4.44% was divested this month.
The statement added: “The Corporation [HDFC] being a shareholder of Gruh is entitled to 14.96% of post-amalgamation paid-up capital of Bandhan, based on the share exchange ratio. However, the RBI has directed the Corporation to hold 9.9% or less of the paid-up capital of Bandhan, post the merger.
“In view of this, the Corporation is required to sell such number of shares in Gruh so as to be entitled to 9.9% of the post amalgamation paid up capital of Bandhan.”
It further added that Gruh will continue to remain a subsidiary of HDFC.
According to a PTI report, HDFC has received INR13.28bn ($190.79m) through Gruh stake sale.
Reports of HDFC planning to sell Gruh Finance to Bandhan Bank first emerged in January this year.
Later in March, RBI approved the proposed scheme of merger of Gruh into Bandhan Bank.