HDFC to raise Rs 4,301 crore through issue of NCDs

HDFC announced that it would raise Rs 4,301 crore through an issue of non-convertible debentures to qualified institutional buyers.

HDFC on Thursday announced that it would raise Rs 4,301 crore through an issue of non-convertible debentures to qualified institutional buyers.

“This is first-of-its-kind Qualified Institutional

Placement (QIP) issue as we are offering a combination of debt and warrants,” HDFC’s Vice-Chairman and Managing Director,Keki Mistry,told reporters here.

“The issue has a size of Rs 4,301 crore and is targeted at domestic investors,including banks,insurance and mutual funds,as we still do not have FIPB approval,” Mistry said.

Out of the Rs 4,301 crore,Rs 2,000 crore represents zero coupon Non-convertible Debentures (NCDs) which had a two-year term and an annualised rate of 7.15 per cent. This rate is equivalent to an interest rate of 6.93 per cent on a monthly compounded basis,he said.

Additional Rs 2,000 crore,which is of three-year debt,is also a zero coupon NCD with an annualised YTM of 7.85 per cent. This translates to a monthly compounded interest rate of 7.58 per cent.

Along with this,HDFC had issued around 1.09 crore warrants at a price of Rs 275 per warrant.

“These warrants would translate to Rs 301 crore. The warrant holder would have a right of exchange of warrants for the equity share of corporation at a price of Rs 3,000 per share,” he said.

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If a warrant holder exercise the option to purchase the shares of the Corporation,the total amount paid per share would be Rs 3,275 which represents a premium of 46 per cent to the closing price on the date of launch which was August 17.

This right to excise the warrant will be valid for a period of three years.

Both the warrants and NCDs will be listed on the NSE and BSE,Mistry said.

The composite of funds to the Corporation as a result of the simultaneous issue of warrants and NCDs would be 4.25 per cent per annum.

The paying date for the transaction would be August 24.

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When asked how the proceeds of the issue would be deployed,Mistry said,”the money is fungible…we need money for disbursements and investments.”

The book-running lead managers for the Warrants were Citigroup Global Markets,Goldman Sachs (India) Securities,JM Financial Consultants,Kotak Mahindra Capital and Nomura Financial Advisory and Securities (India).