HDFC launches Rs 14,000 crore equity fundraising programme
The Housing Development Finance Corporation (HDFC), one of India’s largest private sector mortgage financiers has recently launched its Rs 14,000 crore equity fundraising programme. HDFC has appointed 19 merchant banks for a mega Rs 14,000 crore fundraise.
According to a daily newspaper, this particular decision by an Indian corporate for fundraising purposes in the equity capital markets is being considered as one of the biggest consortium of merchant bankers/advisors thus, setting a new record for India Inc.
Generally, corporates take help of big merchant banks for fundraising which can sometimes turn out to be complex and challenging. There is a possibility of success in the respective field with the help of global and domestic merchant bankers which involve marketing in India and abroad, proper documentation and due diligence, compliance and coordination with different parties comprising regulators amongst other functions.
The fundraising programme comprises qualified institutional placement up to Rs 10,000 crore and Rs 4,000 crore of warrants. HDFC is also raising up to Rs 9,000 crore via redeemable and non-convertible debentures. The qualified institutional placement has been priced at Rs 1760 per share against the floor price of Rs 1,838.94 per share. The warrants which have been made to domestic mutual funds at a strike price of Rs 2,165 will be for a three-year time period.
The 19 merchant banks which have been finalised by HDFC LTD are Morgan Stanley, Kotak Mahindra Capital, Bofa Securities, Jefferies, JP Morgan, Citi, Nomura, HSBC Securities, BNP Paribas, Credit Suisse, UBS, Goldman Sachs, SBI Capital, ICICI Securities, JM Financial, Motilal Oswal, Axis Capital, HDFC Bank and IIFL Capital. This particular information has been confirmed by an individual and other three individuals who are aware about the ongoing deliberations, reported a national daily newspaper.
For the quarter ending on June 30, 2020 the profit of HDFC Ltd dropped 4.7 per cent year-on- year to Rs 3051 crore whereas 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 previous three months, various other banks have also resorted to fundraising programmes to improve their balance sheet in the existing challenging as well as complex environment.
In the year 2020, banks like Kotak Mahindra, JM Financial, PI Industries, Axis Bank, and Info Edge have raised around Rs 30,500 crore via qualified institutional placement with Axis Bank launching its Rs 10,000-crore QIP this week.