NEW DELHI: A resurgent stock market larded with dizzy valuations has given promoters and investors grappling with a torpid merger and acquisition scene an opening to exit, at least partially, their non-core businesses.

Companies such as Citibank, ICICI Bank, Emami and ITC have all encashed their investments in listed entities by selling a part of their holdings in the open market.

Citibank made about Rs 230 crore in the quarter ended December by selling 14% in Polaris Software Lab. In the process, the US financial services group lowered its stake to 28.6% from 43.3% in September. Citi is said to be keen on exiting its noncore businesses after the global economic crisis in 2008. A Citibank spokeswoman had no comment on the deal.

ICICI Bank reduced its stake in 3i Infotech by nearly 10% to 29.9% from 39.4% in the September quarter. The stake sale fetched ICICI Rs 22.67 crore from the Bombay Stock Exchange and Rs 23.49 crore from the National Stock Exchange . The bank has been planning to exit the outsourcing arm for some time and had even approached leading private equity firms such as KKR and Carlyle in this regard.

“In a financial investment, we continue to look for opportunity to encash," said a ICICI Bank spokesperson.From the lows in early March, stock market valuations have rebounded sharply, with the benchmark 30-stock Sensex doubling since April 2009. That has benefited companies such as Citi and ICICI as they are up against sluggish M&A activity as investors badgered by the downturn are still cautious about parking fresh money.

M&A transactions fell to 267 in 2009, companies raising around $10.03 billion , against 454 deals in 2008 when $30.95 billion was raised, as per industry estimates.

“Promoters are finding it easier to sell parts of their holdings in the stock market now as valuations are good,” said a senior lawyer in a top corporate law firm specialising in M&A activity, adding that bigticket M&A deals will take more time to pick up.

One key reason why companies opt for the open market route is that such transactions do not materially impact an invested entity’s management. In the case of Polaris Software, Citibank was holding a 43% stake, far in excess of the promoters Arun Jain’s 30% in the company.

Other major companies that sold parts of their holdings in the open market include Emami and ITC. The Kolkata-based diversified conglomerate shed 19.61% in Zandu Realty in separate transactions for around Rs 105 crore while cigarette-to-FMCG company ITC sold 2% in AgroTech Foods in the open market.