India’s largest housing financier Housing Development Finance Corporation Ltd said on Tuesday that its board has approved to raise as much as Rs 13,000 crore as a part of its fundraising plans. “The board of Directors of HDFC Ltd at its meeting held accorded the approval for raising funds by issue of equity shares and/or other permissible securities up to an aggregate amount Rs 13,000 crore,” HDFC said in a press release. HDFC is going to test the market nearly after a decade.
“The Corporation will consider raising funds by issue of equity shares or compulsorily convertible debentures or warrants or a combination thereof. The issue will be through a preferential issue or qualified placement basis or through any other permissible mode or a combination thereof, subject to necessary shareholder and regulatory approvals,’ HDFC added.
The capital raised from the mega-fundraising plan will be utilised in buying shares of HDFC Bank for an amount worth Rs 8,500 crore via preferential issue. HDFC Currently holds about 21.02% of the paid-up equity share capital of HDFC Bank. HDFC Bank has its separate plans to raise further capital to fund its capital growth. HDFC Ltd said it is buying shares of HDFC Bank “in order for Corporation to more or less maintain its current shareholding in HDFC Bank’s preferential offer up to an amount not exceeding Rs 8,500 crore.”
Other objectives of the fundraising include capital needs for new initiatives. HDFC is also aiming to explore opportunities in health insurance sector along with its subsidiary HDFC ERGO General Insurance Company, acquisition and resolution of stressed assets in the real estate sector. Ahead in future, HDFC will be requiring capital in some of its subsidiaries such as HDFC ERGO General Insurance Company, HDFC Education and Development Services and HDFC Credila Financial Services. HDFC has adequate resources to fund its current mortgage operations, there could arise more opportunities for organic and inorganic growth in affordable housing space which may require additional capital, HDFC further said.
HDFC did not participate in the last equity issue of HDFC Bank in February 2015. Shares of HDFC closed down 0.49% at Rs 1,709.7 while HDFC Bank ended up 0.38% at Rs 1,885.15 on BSE. Indian stock markets extended gains on Tuesday with Sensex and Nifty ending at their closing record highs after Narendra Modi led BJP sweeps in Gujarat and Himachal Pradesh in assembly elections. S&P BSE Sensex jumped 235.06 points or 0.7% to conclude at 33,836.74 whereas NSE Nifty settled 74.45 points or 0.72% higher at 10,463.2.