India: HDFC to raise up to $2b via QIP, to invest $1.3b in HDFC Bank

Photo: Pradeep Gaur/Mint

Housing Development Finance Corp. Ltd (HDFC) is planning to raise up to Rs13,000 crore via a qualified institutional placement (QIP) as it seeks to maintain its shareholding in its subsidiary HDFC Bank Ltd and bolster its capital base to meet the growing demand for home loans.

The fundraising will be either through fresh equity issue or convertible debentures or both, HDFC said in a stock exchange notice. The last time it raised funds through an equity issue was in 2007.

India’s largest and oldest mortgage lender will infuse Rs8,500 crore in HDFC Bank, which is launching a preferential sales of shares. Participating in this share sale will allow HDFC to maintain its 21% shareholding in the banking unit.

An HDFC Bank spokesperson declined to comment on the fund-raising programme of the bank and said its board is meeting on Wednesday.

HDFC’s fund raise will also allow the mortgage lender to grow its affordable housing and health insurance business, said Keki Mistry, its vice-chairman and chief executive.

“We will be considering inorganic opportunities in the housing finance business. The housing business offers huge growth opportunities due to under-penetration of housing and a young population. We also have an affordable housing fund that will require funding,” Mistry said.

The NBFC is also planning to venture into the health insurance business, partnering its general insurance subsidiary HDFC Ergo General Insurance Co. Ltd.

“We see massive opportunity in the health insurance space. We are currently not there in the health insurance sector and would like to get there in big way. We will do that in conjunction with HDFC Ergo General Insurance. But that would require a large amount of capital,” said Mistry.

Apart from affordable housing and health insurance, HDFC will also be exploring investment opportunities in stressed assets space.

“This will not happen immediately but over the next 3-4 years. We have expertise in real estate and it is (our) core competence and we also know that across the country, there are a few projects that are under stress. HDFC can take over those projects in half-completed stage and entrust their completion to a good developer and through HDFC brand, sell it at a higher price,” Mistry said.

He added the HDFC board has set up a committee which will meet frequently to decide the mode of fund raising and exactly how much will be invested in the bank and other businesses such as HDFC Education and Development Services Pvt. Ltd and HDFC Credila Financial Services Pvt. Ltd.

On Tuesday, shares of HDFC Ltd fell 0.49%, or Rs8.40, to Rs1,709.70, while the benchmark Sensex rose 0.70%, 235.06 points, to 33,836.74.

Also Read:

India: Edelweiss raises $236m through QIP

India: Punjab National Bank launches $466m QIP

This article was first published on LiveMint.com.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.