The Chinese central bank has reportedly acquired 1% stake of HDFC, the largest mortgage company in India.
Sources familiar with the matter have stated that the PBOC (Peoples Bank of China), which holds the largest financial assets as compared to other world central banks, held shares of over 1.75 crore as of 31st March, which is worth nearly RS. 3,000 crores currently. However, due to the global market sell-off caused by the coronavirus pandemic, the stock price of HDFC has been declined by 32% of its value from the January 14th high of RS. 2,500 to the recent close of RS. 1,702. HDFC management has reportedly stated that PBOC is gradually increasing its stake.
According to Keki Mistry, CEO and VC of HDFC, the stake of PBOC has reached the 1% regulatory threshold, which had been accumulated over nearly a year. It has hit a 0.8% stake in the housing finance pioneer of India. The PBOC has been maintaining the regulatory guidelines & is fully entitled to make investments in any Indian company.
Deepak Parekh, HDFCs chairman, has recently highlighted the possible takeover of various companies in Europe by China. He has added that the European countries have made it mandatory to gain the government approval prior to making any acquisition deal as the companies are likely to be available at lower costs due to the coronavirus economic crisis. He also advised the entrepreneurs to emphasized on the capital raising and not focus on the stake or price.
The foreign institutional investors cover nearly 70% of the shareholders in HDFC. Other large investors in the company include the Government of Singapore. In the past, Citibank and Standard Life were investors, which held a large stake in the company. However, post the global coronavirus financial crisis, the companys shareholding has become extremely diverse.