Carlyle, Warburg deals signal Indian mkt on strong footing

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Carlyle, Warburg deals signal Indian mkt on strong footing

Market participation is high, liquidity is strong, and private equity players are rubbing their hands with glee.

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Excerpts from India Business Hour on CNBC-TV18 Watch the full show »

Market participation is high, liquidity is strong, and private equity players are rubbing their hands with glee. CNBC-TV18's Harish Rao and Sandeep Srikanth report that in just two block deals, nearly Rs 3,000 crore worth of shares have changed hands and more such deals are coming.

The Indian stock markets are standing tall. So far in 2012, the Sensex has rallied over 11% and if that's not proof enough, here's more:

Within a span of 60 minutes, two big-ticket block deals were struck and absorbed by the markets without a flutter.

Carlyle offloads HDFC stake

The first saw PE fund Carlyle putting one-fourth of its 5.2% stake in home finance giant HDFC on the block. At an average of Rs 677.25 per share, these 20 million shares have fetched Carlyle around USD 270 million.

While Carlyle still holds around 4% in HDFC, this deal has made it double what it invested for the stake in 2007. HDFC says, the buyers would mainly be in it for the long haul.

Keki Mistry, vice chairman and chief executive officer, HDFC said, "It is Carlyle who's sold. They have sold about 2 crore shares. They have about 7 crore shares. I understand they have an internal policy, that if they sold shares of a company, they would not deal in those shares for certain period of time. I don't know exactly what that period is, but it would be three-four months. It would be a clutch of buyers. Some would be domestic, many would be foreign, mostly would be long-only investors."

Warburg sells Kotak Mahindra stake

The second transaction saw Warburg Pincus selling 17.5 million shares in Kotak Mahindra Bank . This represents 2.4% of the bank's outstanding equity. At Rs 490 per share, Warburg has raked in around USD 170 million and still holds over 3% in the bank.

Analysts and market watchers are excited by these deals, not just for their size, but also because it shows the Indian markets in a very strong light. They say that since these big deals did not spark any negative reaction, it is a sign of strong liquidity and investor confidence.

Also watch the accompanying video.