Shares of Housing Development Finance Corporation (HDFC) opened higher on Tuesday after the country’s largest private mortgage lender unveiled plan to raise another ₹57,000 crore through the issue of non-convertible debentures (NCDs). The funds will be raised in various tranches on a private placement basis.
This is the second major fundraising announcement by the housing finance company ahead of the merger with HDFC Bank. On February 26, HDFC raised ₹25,000 crore through bonds, which is touted to be the country's largest-ever rupee bond issuance. The 10-year bonds carry a coupon rate of 7.97%.
Reacting to the news, shares of HDFC climbed 0.5% to ₹2,576.65 on the BSE. The stock opened a tad lower at ₹2,560.05 against the previous closing price of ₹2,563. In a similar trend, HDFC Bank shares were up 0.6% at ₹1,576.
“The board of directors of the corporation on March 27, 2023, granted its approval for the issuance of unsecured redeemable non-convertible debentures under a shelf placement memorandum, aggregating ₹57,000 crore, in various tranches, on a private placement basis,” HDFC said in an exchange filing on Monday.
As per the exchange filing, the fundraising plan is in accordance with the approval granted by the shareholders of the HDFC at the 45th annual general meeting held on June 30, 2022.
The board of the company also approved an increase in the overall borrowing powers of the firm from ₹6 lakh crore to ₹6.50 lakh crore, “outstanding at any point of time and recommended the same for approval of the Members of the Corporation by way of postal ballot”.
“The decision was taken since the outstanding borrowings of the corporation as on date is approx. ₹5.70 lakh crore and the corporation would need to borrow further for its business purposes till the effective date of merger,” it added.
Last week, the National Company Law Tribunal (NCLT), Mumbai Bench, had given its nod to the merger of HDFC and HDFC Bank, which is touted to be the biggest merger in the history of corporate India. The merger deal has already been approved by the domestic stock exchanges, BSE and NSE, Reserve Bank of India (RBI), the Securities and Exchange Board of India (SEBI), the Pension Fund Regulatory and Development Authority (PFRDA), and Competition Commission of India (CCI). It had also received no objection certificates from both the stock exchanges.
HDFC, the country's largest private housing finance company, will merge with the country’s largest private lender HDFC Bank to create a banking behemoth. The merger is expected to be completed by the second quarter of FY24. The amalgamation of HDFC (₹4.72 lakh crore) into HDFC Bank (₹8.78 lakh crore) will create the second-largest entity in India in terms of market capitalisation (₹13.5 lakh crore), after Reliance Industries (₹15.20 lakh crore) and Tata Consultancy Services (₹11.48 lakh crore). The merged entity will also become more than twice the size of ICICI Bank (₹5.95 lakh crore) as of March 28, 2023.
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