HDFC’s share price opened 1.5% higher after announcing ₹14,000 crore fundraising
- HDFC is looking to bring in more capital in the wake of the coronavirus pandemic to the tune of ₹14,000 crore.
- India’s biggest mortgage lender plans to raise ₹10,000 through qualified institutional placement (QIP) and ₹4,000 in warrants.
- Another ₹9,000 will be issued as secured redeemable non-convertible debentures.
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HDFC’s stock value jumped by 1.5% in early morning trade after the company announced that it has plans to raise ₹14,000 crore through its new equity fundraising program. Around ₹10,000 crore will come from qualified institutional placement (QIP) and ₹4,000 crore in warrants.
The floor price for the equity shares has been set to ₹1,838.94 and the board of directors will meet again on August 10 to determine the issue price.
In addition to the ₹14,000 crore, HDFC will also be issuing secured redeemable non-convertible debentures worth ₹9,000 crore.
This is the third time in the last 12 years that HDFC is raising capital through such an offering. It did so once in 2009 and then again in 2015.
HDFC's first full quarter in the face of the coronavirus pandemic saw a loss of 4.7% at the end of June. Its gross non-performing loans stood at ₹8,631 crore accounting for 1.87% of HDFC’s loan portfolio.
The company already has ₹12,285 in the bank as provisions to serve as a cushion once the Reserve Bank of India’s (RBI) moratorium ends on August 31. It even added another ₹1,199 this quarter specifically for COVID related accounts.
Despite having safeguards in place, many companies are going down the QIP route to shore up capital against the uncertainty of the coronavirus pandemic. This includes Kotak Mahindra Bank, Info Edge and — most recently to lay down its offering — Axis Bank for a whopping ₹ 10,000 crore. Others either have approved fundraising plans on stand by or are in the process of putting out their own QIP.
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