Issue of Equity and Convertible Instruments by HDFC

Housing Development Finance Corporation (HDFC), the largest mortgage lender in the country is now planning to raise upto Rs. 13,000 crore through issue of equity shares and other securities.

  1. The bank further plans use these proceeds to invest in HDFC Bank, to the tune of Rs. 8500 crores, which will enable it to retain its stake at 21 per cent in the bank.
  2. Also, HDFC plans to invest in healthcare insurance, buying of distressed real estate assets, and also go for funding inorganic growth in the area of affordable housing finance sector and above all to support growth plans of subsidiaries.
  3. Necessary approval by the HDFC board has since been made for raising funds through issue of shares and/or other permissible securities to the tune of Rs.13000 crore.

How will this fund be raised?  This is expected to be done through

  • Issue of preferential shares
  • Qualified institutional placements or
  • Other permissible mode or combination.

However, necessary approval from the shareholders and regulators will be obtained before the said task is taken up.

 

General:

HDFC should participate in the preferential offer of HDFC Bank, not exceeding to the tune of Rs. 8500 crore in order to maintain its shareholding in the bank.
HDFC along with other owned subsidiaries holds 21.01 per cent of the paid up equity share capital of HDFC Bank.

It may be noted that HDFC did not participate in the equity issue of the Bank, during Feb 2015.

Author: Admin Bankedge

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