HDFC’s Rs 14,000 crore fundraise draws top global funds

Mumbai: India’s biggest mortgage lender Housing Development Finance Corporation (HDFC) launched its Rs 14,000-crore equity fundraising programme on Wednesday, likely drawing bids from Singapore-based GIC, Oppenheimer and Fidelity.

The hybrid fundraising programme includes qualified institutional placement (QIP) up to Rs 10,000 crore and Rs 4,000 crore of warrants. The home financier is also raising up to Rs 9,000 crore through secured redeemable non-convertible debentures (NCDs).

“The QIP is priced at Rs 1,760 per share as against the floor price of Rs 1,838.94 per share. The warrants which are issued to domestic mutual funds at a strike price of Rs 2,165 will be for a tenure of three years,” said a person with knowledge of the development.

Top market sources told ET that the offer is drawing bids from the biggest names in global finance.

HDFC has appointed Kotak Mahindra Bank as the lead banker to the issue. Citi, JM Financial, Bank of America, JPMorgan, SBI Capital Markets, BNP Paribas are among the others, making up the contingent of 19 financial houses shepherding the sale.

On June 5, ET had published that HDFC was exploring a stake sale to institutional investors to raise at least $1 billion, seeking to take advantage of a surge in share prices to fund its expansion plans after the Covid-19 pandemic.

Shares of HDFC, which declined 26 per cent so far this year, closed at Rs 1,777 on the BSE Wednesday.

HDFC did not respond to ET’s query.

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 space, including housing finance and in areas where its subsidiaries operate. This is the third time in the last 12 years that HDFC is raising capital through such a hybrid offering. It had done so in 2009 and in 2015.
The proceeds will be used over the next two-three years for funding portfolio acquisitions and inorganic opportunities at the parent level and subsidiaries. HDFC will also need to invest in HDFC Bank’s capital raise, which may happen in the next two years.

HDFC’s net profit fell 4.7 per cent year on year to Rs 3,051 crore for the quarter ended June 30, 2020. However, the mortgage lender reported a 10 per cent increase in its net interest income at Rs 3,392 crore with a net interest margin of 3.1 per cent. In the last three months, several financiers have announced fundraising programmes 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.

So far in 2020, Kotak Mahindra Bank, JM Financial, PI Industries, Axis Bank and Info Edge have raised nearly Rs 30,500 crore through QIP, with Axis Bank launching its Rs 10,000-crore QIP this week. Several other financial institutions have either raised funds, approved fundraising plans or are in the process of doing so.