HDFC to raise Rs 5000 crore

Mumbai, June 8: HDFC - the country's largest housing finance company - today said it was planning to raise Rs 5,000 crore via secured redeemable non-convertible debentures (NCDs) and warrants.

HDFC will seek shareholder approval for the issue at the annual general meeting on July 28.

According to the company, the warrant holder will be entitled to exchange them with the equity shares of the company at a premium, which will be in accordance with the present regulations.

In a filing with the stock exchanges, the company disclosed that the maximum dilution that could occur, if all the warrants are exchanged with equity shares, would be 2.2 per cent of the expanded equity share capital.

The NCDs and the warrants will be issued to qualified institutional buyers and they will be listed separately on the BSE and the NSE.

Though HDFC did not disclose the reason behind the proposed issue, informed sources said it would utilise the Rs 5,000 crore for normal operations. Reportedly, the funds will also be used to make provision for deferred tax liability.

According to the National Housing Bank (NHB) guidelines, HDFC had to set aside Rs 120 crore as deferred tax liability during the fourth quarter ended March and Rs 384 crore for the year. Analysts said the company would have to make more provision in this regard over the next three years.

Sources, however, pointed out that the proceeds of the issue would not be used to hike HDFC's stake in HDFC Bank. HDFC's stake in the private sector lender had fallen to 21.7 per cent from 22.5 per cent following a qualified institutional placement (QIP) by the latter. They said HDFC had an option to hike its holding in HDFC Bank to the pre-QIP level in the next 18 months.

For the fourth quarter ended March, HDFC has reported a standalone net profit of Rs 1,862.43 crore compared with Rs 1,723.10 crore in the same period last year.

For the entire financial year, the consolidated net profit came in at Rs 8,762.62 crore.

HDFC shares today closed 1.78 per cent lower at Rs 1,179.65 apiece on the BSE.

HDFC Bank