The Children's Investment Fund Management, the hedge fund firm founded by Christopher Hohn, has emerged as the single largest seller of Indian stocks among foreign institutional investors. The UK-based firm is reported to account for about 10 per cent of an estimated INR1.08trn (USD20.8bn) of stock sales by foreign investors so far in 2009.
TCI is reported to have sold INR115bn (USD2.2bn) worth of stocks, equivalent to one-third of its purchases in 2008. Last year the firm invested INR346bn (USD6.7bn) in Indian companies, mostly banks, at a time when other foreign institutional investors were turning bearish, but it now appears to be unloading its investments at a steep discount to the acquisition prices.
TCI reportedly received INR12.9bn on March 9 for a 5 per cent stake in Indian Overseas Bank, having spent INR65bn to acquire an 8.4 per cent shareholding last year. And after buying 14.8 million shares of Punjab National Bank at an average price of INR516, it sold part of the stake on March 5 at an average price of INR294.
TCI's about-turn on prospects for India in general and its financial sector in particular is the latest setback for an activist hedge fund manager whose once-stellar reputation has slipped in recent months. Last year the firm's flagship fund was down around 43 per cent. It may or may not be a coincidence that partner Patrick Degorce, who led many of TCI's financial sector investments, left at the end of last year.