The People’s Bank of China (PBoC) has made a quiet entry into ICICI Bank as a shareholder. Earlier, its disclosure about having an over 1% stake in housing finance major HDFC had led to some hectic activity at the Centre, including a change of rules for FDI from neighbouring countries.
The Chinese central bank has picked up a minuscule stake through a £1.5 million investment in the bank’s recently concluded qualified institutional placement (QIP), through which the Indian private sector lender had raised £1.5 billion,sources said. The stake was bought through an arm of PBoC, a source said without elaborating about the exact structure.
PBoC’s stake is very insignificant when compared to ICICI Bank’s market capitalisation of almost £ 24 billion, a source said. Current rules require that all listed companies should disclose the names of shareholders who hold 1% or more of the listed entity’s equity capital. Additionally, rules require that the names of all those investors who pick up at least 5% in a QIP offer should be disclosed. Hence, PBoC’s name does not show up in any of ICICI Bank’s recent disclosures, the source said.
The share purchase comes at a time when the government is looking to clamp down on stake acquisitions by Chinese portfolio investors. The finance ministry and Sebi are seen to be dragging their feet on the issue. Currently, among Indian companies, PBoC has stakes in HDFC, Ambuja Cement and Piramal Enterprises. In all the companies, the holding is below the 1% level, which necessitates compulsory disclosure.
By March-end, PBoC’s stake in HDFC was slightly above the 1% level as it bought some shares just before the Indian and Chinese military forces’ skirmish in the Galwan valley in Ladakh region. However,during the April-June quarter, the Chinese central bank sold part of its stake in HDFC and, as of June-end, it had fallen below the 1% level, company officials said.
In Piramal Enterprises, as of June-end, the Chinese central bank had a 0.43% stake, while in Ambuja Cement, as of December-end, it had a 0.32% stake. There are market rumours that PBoC also has small stakes in a few more listed companies. Sebi has already asked depositories and custodians of foreign investors to specifically disclose such stakes to the regulator, sources said.
