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Last Updated : Dec 20, 2017 01:49 PM IST | Source:

HDFC to raise Rs 13,000 crore via QIP or private placement

The fund raising could be in the form of pure equity, convertible debentures, with or without warrants attached to it.

HDFC Board on Tuesday approved a plan to raise capital of up to Rs 13,000 crore through private placement or via qualified institutional placement (QIP) in the next one year.

Additionally, HDFC — India’s biggest private housing finance player will also infuse up to Rs 8,500 crore in its subsidiary HDFC Bank — in which it holds 21.01 percent stake at present.

The capital raised would be used to maintain its 21 percent stake in HDFC Bank, buying more portfolios into the health insurance segment, investments in distressed real estate assets and other growth opportunities including buying other housing finance companies.

“We see massive growth in the affordable housing segment and any inorganic growth in the housing finance space," said Keki Mistry, Vice-chairman and CEO of HDFC.

"In HDFC Bank, the amount of infusion will depend on the amount of stock options the bank has outstanding, the price at which the bank does the issue as per the SEBI regulated price and so the cap is Rs 8,500 crore. It could be now or early part of next year, depending on the bank’s requirements,” Mistry said.

Currently, HDFC's stake in HDFC Bank stands at 21.01 percent, which had dropped from 24 percent after HDFC had not subscribed to a capital raising done by HDFC Bank in 2015. Mistry said, they would like to maintain at least 21 percent stake in HDFC Bank on a fully diluted basis.

The fund raising could be in the form of pure equity, convertible debentures, with or without warrants attached to it.

A committee appointed by the Board will decide how much money to invest in the bank, how much capital to raise and in what form with what kind of instruments, etc. "We have the option of doing a private placement or QIP," he said adding that the capital would suffice for several years.

Foray into health insurance and stressed realty assets

Mistry further said that the company would like to get into health insurance business and could tie-up with HDFC Ergo for it.

“We are currently not in health insurance and would like to get into health insurance in a big way. We could get into it through or in conjunction with our life insurance partner HDFC Ergo, which is our subsidiary,” he said speaking to reporters after the Board meeting.

HDFC’s foray into stressed real estate asset market would be over 3-4 years.

“We have a lot of expertise in the real estate market, it’s our core competence, we understand housing and all over the country we have a lot of distressed assets which we could take over which are half completed or at completion stage. We can complete the construction through a good developer and under our supervision we can sell it at a higher price,” Mistry said.

Additionally, the new funds could also be used to infuse capital into its subsidiaries including its education loan arm HDFC Credila, HDFC Ergo, HDFC Capital partners which has an affordable housing fund.

"Housing is the most affordable in the last 20-30 years. So this is the best time for the affordable housing segment and we see strong growth," he said listing out lower interest rates, credit linked subsidy scheme (CLSS), stagnant house prices and fiscal benefits on home loans.
First Published on Dec 19, 2017 05:55 pm

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