The largest mortgage player HDFC has alloted 5.47 crore shares worth Rs 3,285 crore on conversion of warrants on maturity to holders,who have made a profit of around 122 per cent per unit.
In August 2009,HDFC had issued warrants – along with non-convertible debentures (NCDs) of Rs 10 lakh each to qualified institutional buyers.
The warrant holders had the alternative to exercise the conversion option within three years from the date of the allotment.
The issue,comprising zero coupon NCDs aggregated to Rs 4,000 crore. Out of this Rs 2,000 crore NCD s were redeemed in August 2011 and the balance Rs 2,000 crore were redeemed onAugust 24 this year,HDFC said.
Pursuant to the exchange of the warrants,the Corporation issued and allotted 5,47,43,150 equity shares of Rs 2 each and realised an amount of Rs 3,284.59 crore,representing 99.95 per cent of the warrants issued.
The conversion date was fixed on August 24,2012 when its share price was Rs 723.
HDFC had issued these warrants at Rs 55 apiece three years ago,and going by the current stock price,the warrants have offered investors nearly 121.8 per cent return on conversion — much higher than a 13 per cent rise in the Sensex during the period,the bank said.
In August 2009,HDFC had issued over one crore warrants at Rs 275 each and the conversion price was fixed at Rs 3,000 based on the then face value of Rs 10 per share.
Subsequently,it split the Rs 10 stock into five shares of Rs 2 each after which the number of warrants rose to Rs 5.5 crore while issue and conversion prices were adjusted to Rs 55 and Rs 600,respectively.
As of date,the paid-up equity share capital of HDFC is Rs 307.61 crore and the balance in securities premium account stands at Rs 9,297.14 crore,the lender said.
The issue was the first-ever composite issue of NCDs with warrants by any company in Asia,excluding Japan,which was offered to and fully subscribed by domestic institutional investors,the bank said in a statement yesterday.
The proceeds of the said zero coupon NCDs were utilised to subscribe to the preferential allotment of equity shares offered by its sister concern HDFC Bank.
In terms of the said issue,every warrant-holder had a right to exchange the said warrants with one equity share of Rs 2 each of HDFC,on payment of Rs 600 per equity share and the last date for submission of the warrant exchange forms with the prescribed documents and consideration amount was August 24,2012.
The proceeds from the warrant exchange will be used to replace the zero coupon bonds and consequently the Corporation will not earn any additional interest income on the amounts raised,it added.