Housing Development Finance Corp Ltd (HDFC) shares lost as much as 3.3% in early trade on Monday after reports emerged that the People’s Bank of China (PBOC) has increased its shareholding in the mortgage firm.
At 10:06 am, HDFC shares were trading down at Rs 1,656.15, down 2.8%, after hitting the day’s low of Rs 1,646.55 on BSE.
According to exchange data, the People’s Bank of China had possibly purchased 1.75 crore shares, or 1.01% stake, in HDFC possibly in the March quarter. Notably, the stake purchase comes at a time when HDFC shares have shed over 31% year-to-date.
HDFC’s vice chairman and CEO Keki Mistry said the PBOC has been an existing shareholder and had owned 0.8% in the company as of March 2019. He added that the disclosure has been made now since the stake has hit the 1% regulatory threshold.
“They have been accumulating the shares over a year and are now holding 1.1%,” Mistry said.
Meanwhile, HDFC chairman Deepak Parekh told Moneycontrol that the transaction is not for the Chinese Central bank itself but has been on behalf of the Chinese sovereign wealth fund SAFE.
“There is no issue here. They (PBOC) have been buying stake since the last two years,” said Parekh. “But they are buying for sovereign wealth fund. The front is the People’s Bank as they must be having the foreign exchange. Since the price came down, they bought more,” Parekh said.
He informed that the Saudi Arabian Monetary Authority (SAMA) has also picked up a 0.7% stake in HDFC on behalf of Saudi sovereign wealth fund, but SAMA’s name isn’t reflected in the names of major shareholders as the holding in the company is still less than 1%.