HDFC is also exploring opportunities in the health insurance sector in conjunction with its subsidiary HDFC ERGO General Insurance Company. It is also evaluating opportunities for acquisition and resolution of stressed assets in the real estate sector.
The country’s largest mortgage lender Housing Development Finance Corporation (HDFC) has received board approval to raise as much as Rs 13,000 crore through equity or convertible instruments, partly to subscribe to a proposed preferential issue by HDFC Bank. “The exact amount of the said subscription would depend on the preferential issue that HDFC Bank would be making to the Corporation,” HDFC said in an exchange filing. HDFC has received approval of its board to expend a maximum of Rs 8,500 crore to subscribe to the shares of HDFC Bank that are offered on a preferential basis. The remaining Rs 4,500 crore is likely to be used for investments in some subsidiaries and for business operations, though there is no clear indication on this. HDFC proposes to raise the funds via issue of equity shares, compulsorily convertible debentures or warrants through preferential issue or qualified institutional placement. The mortgage lender is the promoter of HDFC Bank and currently holds, along with its wholly owned subsidiaries, just over 21% stake in the country’s largest private bank. The fresh subscription is expected to enable HDFC to maintain its stake at the same level in HDFC Bank, which is in-turn looking to raise funds to strengthen its balance sheet. “At any point in time, we would like to maintain our shareholding in HDFC Bank over 20%,” an executive at HDFC had told FE last week. To enable the fund raise, the board of HDFC has granted approval for increase in its authorised share capital to Rs 370 crore, comprising 185 crore equity shares of Rs 2 each, from the existing authorised share capital of Rs 350 crore. HDFC is also exploring opportunities in the health insurance sector in conjunction with its subsidiary HDFC ERGO General Insurance Company. It is also evaluating opportunities for acquisition and resolution of stressed assets in the real estate sector.
“The Corporation has set up funds for investing in the equity and mezzanine debt of affordable housing projects. The Corporation has committed sponsor support to these funds,” said the press release issued by the firm. HDFC indicated that it may use some of the capital to be raised for investments in subsidiary companies like HDFC ERGO General Insurance Company, HDFC Education and Development Services and HDFC Credila Financial Services, amongst others. HDFC Bank is set to hold a board meeting on Wednesday to consider its fund raising plans via issue of securities through a QIP, American Depository Receipts (ADRs) programme, preferential allotment or other method. It will also consider the preferential issue of shares to HDFC.