December 19, 2017 / 11:57 AM / a year ago

Mortgage lender HDFC unveils $2 billion fundraising plan

MUMBAI (Reuters) - Indian mortgage lender Housing Development Finance Corp Ltd said on Tuesday it would raise as much as 130 billion rupees ($2.03 billion) by selling shares or convertible bonds mainly to maintain its stake in HDFC Bank.

HDFC, the parent of HDFC Bank and whose main business is home loans for retail customers, will seek to subscribe to a potential preferential share issue by HDFC Bank so that its holding in the bank remains at about 21 percent.

HDFC Bank, India’s second largest, is planning a fundraising to support its growth programme via a share sale to institutions or American Depositary Receipts. Its board is scheduled to meet on Wednesday to decide on the bank’s fundraising plan and will also discuss a preferential issue to parent HDFC.

HDFC, which secured board approval earlier on Tuesday for its own fund-raising plan, said it would need to buy shares worth up to 85 billion rupees in HDFC Bank to maintain its stake holding in the bank.

HDFC also needs capital for potential business segments including health insurance, and acquisition and resolution of stressed assets in the real estate sector, HDFC said in a statement.

Part of the capital raised could also be used for investing in affordable housing projects, it said. It also said some of its subsidiaries including HDFC ERGO General Insurance might need growth capital in future.

HDFC is also looking at a preferential issue or a share sale to institutions among other options to raise funds. It will seek shareholders’ approval for this fundraising.

Ahead of the HDFC announcement, its shares closed 0.6 percent lower in a Mumbai market that was up 0.7 percent. HDFC Bank shares rose 0.3 percent.

($1 = 64.0250 Indian rupees)

Reporting by Devidutta Tripathy and Abhirup Roy; Editing by Biju Dwarakanath and Jane Merriman

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