HDFC to launch Rs 14\,000 crore fund-raising program today
India’s largest private sector lender Housing Development Finance Corporation (HDFC) to launch its Rs 14,000 crore fund raising program on Wednesday, two people aware of the development said. The hybrid fundraising program includes qualified institutional placement (QIP) of Rs 10,000 crore of NCD plus warrants and Rs 4,000 crore of warrants.
The warrants are issued to domestic mutual funds at a strike price of Rs 2,200, said one of the persons. Shares of HDFC are currently trading at Rs 1777 on the Bombay Stock Exchange (BSE).
The lender last month had appointed investment bank Kotak Mahindra Capital Co. as its lead banker. Others investment banks such as Citigroup, Morgan Stanley, Jefferies and Bank of America are also said to be helping HDFC.
In June, the board of HDFC approved raising capital of Rs 14,000 crore to finance organic and inorganic business opportunities that may arise in financial services including housing finance and in areas where its subsidiaries operate.
This is the third time in last 12 years that the lender is raising capital through such a hybrid offering. It had done so once in 2009 and in 2015.
Spokesperson for HDFC was not immediately available for comments.
“The warrants will carry a coupon of around 5% and will be for a tenure of 18 months,” said another person with knowledge of the development.
In the last three months several lenders have announced fund raising programme to strengthen their balance sheet in the current challenging environment. Also, the high liquidity in the market makes it conducive for lenders to raise money.
Financial institutions such as Kotak Mahindra Bank, ICICI Bank, Yes Bank, State Bank of India, Bank of Baroda, IDFC First Bank, AU Small Finance Bank and several others have either raised funds, approved fundraising plans or are in the process of doing so. Early this week Axis Bank launched a fund raise of Rs 10,000-crore with Rs 8,000 crore as the base deal size and Rs 2,000 crore green shoe option.
So far in 2020, about eight companies including Kotak Mahindra Bank, JM Financial, PI Industries Axis, Bank and Info Edge have raised nearly Rs 30,500 crore through QIP.
HDFC’s net profit fell 4.7% year-on-year to Rs 3,051 crore for the quarter ended June 30, 2020. However, the lender reported a 10% increase in its net interest income at Rs 3,392 crore with a net interest margin of 3.1% during the reported quarter.