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HDFC To Raise $850 Million Via QIP; The Largest So Far

10 June, 2009

HDFC, one of largest home financing companies in India, is all set to raise Rs 4,000 crore through QIP (Qualified Institutional Placement), which is currently proving to be the most preferred mode of fundraising. HDFC will raise the amount through the QIP of Non convertible debetntures and warrants. The raised funds will be used for capital requirements.

“A committee of directors of the corporation at its meeting held on June 09, 2009 has approved a proposal for a combined offering of secured redeemable Non-Convertible Debentures (NCDs) of up to Rs 4,000 crore along with warrants,” the company said in a filing to the Bombay Stock Exchange (BSE).

Both, the NCDs and the warrants will be listed separately on the stock exchanges. HDFC would allow a maximum dilution of 3.5% of the expanded equity share capital of the corporation, if all the warrants are exchanged into equity shares.

The warrants will allow the shareholders to buy shares in the corporation at a fixed price on a future date. The fixed price will be inclusive of a premium to the market price prevailing on the date of issue.

However, the issue of NCDs as well as the warrants is still subject to the approval of the shareholders which will be sought at the corporation’s Annual General Meeting on July 22, 2009. HDFC will decide the quantum of the premium and the tenure of the NCDs after it gets the shareholder approval.

While the corporation claims to have sufficient headroom for the accommodation of FIIs, currently, FIIs hold a 59.85% stake in it and FIs hold a 15% stake. HDFC had raised Rs 3,100 crore through a private placement to Carlyle and Citi in July 2007 and had raised $500 million through the issue of foreign currency convertible bonds (FCCBs) in 2005.

QIPs have suddenly become the most favoured mode of raising funds, especially in the real estate sector. Realty giant Unitech started the trend when it raised $325 million through a QIP in April this year. Since then, it has been raining QIPs. Indiabulls Real Estate followed Unitech with its $533 million QIP last month. PTC India raised $106 million in its QIP.

While Parsvnath Developers and HDIL have already received board approvals for raising funds through QIPs, others like, Purvankara, Gammon Infra, Sobha Developers, HCC and Omaxe are too considering the QIP route.


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HDFC To Raise $850 Million Via QIP; The Largest So Far

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