Four firms in which Citigroup held stake fell by 2.30% to 3.95% on reports the US bank is offloading shares in these companies to raise money to offset its sub-prime related losses.
Polaris Software Lab, Northgate Technologies, Tanla Solutions and Havells India fell by 2.30% to 3.95%.
As per reports, in several bulk deals from October 2008, Citibank has sold 1.98 crore shares of Tanla Solutions at Rs 119 each. The bank has also sold 1.8 crore shares of Havells India at Rs 217.5 a share. But in Northgate, the bank increased its holding on 26 November 2008 by 5,38,240 shares after it had sold 8,40,597 shares earlier.
The gradual stake sale by Citigroup is reportedly aimed at liquidating its non-strategic investments to improve its cash flow, narrowed by the sub-prime related losses the bank had suffered in the US mortgage market. The level of toxic assets in the bank's balance sheet is about $305 billion, according to media reports.
The US government on 23 November 2008 bailed out Citigroup Inc, agreeing to shoulder most of its toxic assets. The US government also injected $20 billion of new capital, on top of $25 billion it just put into the bank, and receive preferred shares with an 8% dividend. Citigroup received the latest infusion after its shares plunged 60% in in a week amid worry it lacked enough capital to survive.
Citibank held 43.33% stake in Polaris, 8.75% in Tanla Solutions 5.32% in Northgate and 4.56% in Havells India as on 30 September 2008.
Polaris Software Labs and Tanla Solutions are mid-sized software developers. Havells India manufactures electrical products. Northgate Technologies provides telecommunication and voice-over-Internet (VOIP) technologies.
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