Temasek sells ICICI Bank stake into India rally

By Prashant Mehra and Manoj Dharra

MUMBAI (Reuters) - Singapore state investment group Temasek Holdings has sold a 1.4 percent stake in ICICI Bank , India's No. 2 lender, raising $299 million in the latest signal investors are using a rally in the Indian market as an exit opportunity.

The open market sale, announced on Wednesday, came less than a week after U.S. private equity firms Carlyle Group and Warburg Pincus pared their stakes in two financial companies in deals worth $440 million.

India's main stock market index is up 14.6 percent so far this year, mainly led by financial stocks, and bankers expect to see more exit moves as a result.

The market dropped nearly 25 percent in 2011, making it one of the worst global performers and leaving few IPOs or block sales.

Temasek held 39.83 million shares of ICICI Bank, or 3.46 percent, as of end-December, via its unit Allamanda Investments Pte, according to exchange data.

On Wednesday, Temasek sold 15.9 million shares of ICICI Bank at an average 924.05 rupees each in block deals. It would hold about 2 percent stake in the Indian bank after the share sale, which was arranged by Goldman Sachs .

Temasek had launched the share sale in the price band of 924 rupees to 937.75 rupees each, a zero to 1.5 percent discount to its Tuesday close price, according to a term sheet seen by Reuters on Tuesday.

Shares in ICICI Bank, which has a market value of about $22 billion, ended 1.8 percent lower on Wednesday at 920.45 rupees, while the main Mumbai market rose 0.5 percent.

"As an active investor, Temasek rebalances its portfolio from time to time," a Singapore-based spokesman for Temasek said, without elaborating.

MORE TEMASEK BANK STAKE SALES?

Temasek's move to reduce its ICICI Bank holding is part of the investor's rebalancing of its financial portfolio, and the fund may sell more of its bank stakes, sources familiar with the matter said.

About 36 percent of Temasek's portfolio was in financial services in the fiscal year that ended March 31. That could change in the months ahead as a relatively new team of fund managers that includes investment bankers from UBS and Credit Suisse exercises its influence on Temasek strategy.

Temasek's bank holdings include stakes in China Construction Bank <601939.SS>, Bank of China <601988.SS>, and Pakistan's NIB Bank .

(Writing by Sumeet Chatterjee; additional reporting by Saeed Azhar in SINGAPORE; Editing by Andrew Callus)