HDFC to raise Rs4000 crore through QIP route

The country's largest housing finance company, Housing Development Finance Corporation, said on Tuesday that it had received approval of its directors to raise up to Rs4000 crore through a debenture-cum-warrant issue to institutional investors.

The company said it would issue secured redeemable non-convertible debentures on qualified institutional placement (QIP) basis, along with warrants convertible into equity shares at a future date, with both being listed separately on stock exchanges.

The maximum dilution on conversion of all warrants to shares would be 3.5 per cent of the expanded capital, HDFC said in a statement to the Bombay Stock Exchange.

''We have received an in-principle approval. The proceeds will be used for normal lending purposes. Last year, we disbursed loans worth Rs30,000 crore. This year, we intend to grow faster,'' said Keki Mistry, vice-chairman and managing director of HDFC.

The company said these were three-year debt papers with rates of 7.25-7.5 per cent. The warrant holder would be entitled to buy the company's shares in the future. The premium to be paid while buying the shares will be determined at the time of issuance of the warrants.

''The final decision on the issue is subject to the shareholders' approval at the annual general meeting on 22 July. Only after that will the date of opening of the issue be decided,'' said Mistry. Shares of HDFC surged after the announcement.

Since the beginning of the fiscal year, as many as 32 companies have announced plans to raise Rs 40,000 crore through the QIP route. However, these issuances are mostly through equity, unlike this debt issue of HDFC.