The Hindu Business Line : Also in exit mode?

With the Bear Stearns issue having churned up the markets, bulk and block deals data from the two exchanges will continue to hold cues to further distress sales by troubled foreign investors. But with most of the big global names in i-banking circles under a financial cloud, it may be difficult to sift routine “sells” undertaken by FIIs, from the ones which signal big-ticket liquidation of “India” positions.

Having said that, here’s an interesting flag for investors from the bulk deals data. LB India Holdings Cayman II — a Mauritius-based subsidiary of the fourth largest US investment bank Lehman Brothers, has also been a prominent seller in recent trading sessions. On March 17, it sold stocks such as Asian Electronics, Logix Microsystems and S. Kumar’s Nationwide.

This resulted in the firm liquidating its full holdings in Asian Electronics and Logix Micro, and 80 per cent of its holdings in S. Kumar’s Nationwide.

Earlier, on March 10, LB India Holdings had pruned 15 per cent of its holding in Voltamp Transformers and one-third of its holdings in Lakshmi Energy (also part of the Bear Stearns portfolio); and Karuturi Networks faced a similar fate in January. The firm appears to have been in exit mode for some time now. At the end of December, Lehman Brothers had significant (1 per cent or more) equity exposure in 20 Indian companies worth over Rs 1,100 crore.

The top five investments were Triveni Engineering, Lakshmi Energy, Voltamp, Mastek and PSL.

Interestingly, at the beginning of March, Lehman’s portfolio was worth around Rs 700 crore, probably as investments suffered losses due to the correction in the markets. Lehman Brothers had more than 1 per cent stake in over 30 companies at the end of September 2007, indicating an overall reduction in exposure to Indian equities.

The overall value of stocks sold by the bank is not too significant in the context of the overall market, at about Rs 100 crore.

Lehman Brothers still has a cumulative exposure to Indian shares of Rs 600 crore through Lehman Brothers Asia, Lehman Brothers International Europe and LB India Holdings Cayman II.

But, going by the impact that even small sales by Bear Sterns had on individual mid- and small-cap stocks, caution may be the watchword for investors in such stocks.

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