HDFC Bank plans to raise up to ₹24,000 crore
MUMBAI: HDFC Bank Ltd is planning to raise up to ₹24,000 crore through a combination of preferential allotment and qualified institutional placement (QIP), the lender said in a stock exchange notification on Wednesday.
The bank will be raising nearly a third of the amount from its parent Housing Development and Finance Corp Ltd.
India’s most valuable lender will be raising up to ₹8,500 crore from HDFC.
“Board of directors of the bank, at their meeting held on 20 December 2017, have approved raising of funds aggregating up to ₹24,000 crore of which an amount up to a maximum of ₹8,500 crore shall be through…a preferential issue to HDFC Ltd,” the notification stated.
HDFC, India’s largest mortgage lender hold 21.01% stake in the HDFC Bank and will be infusing funds in the bank to maintain its current shareholding.
On Tuesday, mortgage lender HDFC also announced that it was planning to raise up to ₹13,000 crore through QIP or preferential allotment or a combination of both.
The balance amount will be raising by the bank through “issuance of equity shares or depository receipts pursuant to a QIP/American Depository Receipt/Global Depository Receipt (GDR) program,” the notification added.
The bank did not divulge plans on how it plans to use the funds. The lender will be convening an extra-ordinary general meeting to seek approval of shareholders for its fund raising program.
HDFC Bank is looking to raise funds at a time when the market is flush with money and several lenders, especially state-run, are tapping the equity market to boost their capital.
Earlier in June this year, State Bank of India (SBI) raised ₹15,000 crore through QIP, the largest ever by any bank in the country.
In December, Punjab National Bank and Union Bank of India raised ₹5,000 crore and ₹2,000 crore through QIPs respectively.
Bank of Baroda is looking to raise around ₹6,000 crore from the equity market as well.
“HDFC Bank’s growth rate has been above the systemic growth rate and we expect that to continue. There are expectations that the economy will be picking up from next year onwards and against that background it makes sense for the bank to tap the equity market to beef up its tier I capital. The funds should be sufficient for the next 2-3 years if the bank grows at the rate of 20-25%,” said Karthik Srinivasan, group head of financial sector ratings at Icra Ltd.
On Wednesday, shares of HDFC Bank closed at ₹1,868.05 a share on the BSE, down 0.91% from its previous close, whereas the benchmark Sensex closed at 33,777.38 points, down 0.18% from its previous close.