"NatWest has told us that they want to sell off their stake in HDFC Bank as they have decided to move out of equity operations in Asia. They will be offloading their stake to an investor acceptable to us," HDFC chairman Deepak Parekh said.

The NatWest group was given a 20 per cent stake in the bank as a strategic alliance partner in May 1995 before the bank went public. The stake was placed through two private placements of 2 crore equity shares each to two Mauritious-based Natwest group holding companies at the face value of Rs 10. The Natwest stake was locked-in for three years, which expired on May 31.

With the lock-in period off, NatWest can start hunting a buyer now. Parekh said Natwest was in no hurry, though. "They have told us that they will informus before selling their stake. The new buyer will have to be acceptable to us," Parekh said.

The new-generation HDFC Bank's shares boast of the largest price-earnings multiple in the segment. Its share price closed at Rs 69.15 on the Bombay Stock Exchange on Friday, with a P/E multiple of 25.2.

For the NatWest group, the deal will earn a substantial return on the original investment.

HDFC may decide to pick up part of the stake offered by NatWest, depending on the price offered and the likely buyer for the rest of the stake. HDFC can pick up only a maximum of another 15 per cent stake, as it already holds 25 per cent stake in the bank. The Reserve Bank of India (RBI) guidelines on private-sector banks limit the promoters' stake to 40 per cent of the equity. HDFC Bank may also look for another strategic partner, with good presence in the western markets to replace the Natwest group. Natwest Markets, as strategic partner in HDFC Bank, provided the latter with technological inputs and access to westernmarkets. Apart from Natwest, around 3 per cent stake was placed with a Singapore-based overseas corporate body -- Jarington Pte, at around the same time with a similar 3-year lock in provision.