The board of directors of HDFC, at its meeting held on Tuesday, accorded its approval for raising funds to the tune of ₹13,000 crore.
The fund-raising will be done through a preferential issue or qualified institutional placement or through any other permissible mode or combination thereof, subject to necessary shareholder and regulatory approvals.
This capital raising exercise is aimed at helping the housing finance major to, among others, participate in the preferential issue of HDFC Bank; meet capital needs for new initiatives, including foraying into health insurance, acquisition and resolution of stressed assets in the real estate sector; fund organic and inorganic growth opportunities in the affordable housing space and growth of subsidiaries.
With HDFC Bank proposing to raise further capital to fund its growth, HDFC said it will participate in the bank’s preferential offer up to an amount not exceeding ₹8,500 crore (subject to regulatory approvals and the approval of members of the Corporation). This move is aimed at maintaining the Corporation’s current shareholding in HDFC Bank (post dilution as a result of outstanding stock options).
HDFC, in a statement, highlighted the fact that it did not participate in the last equity issue of HDFC Bank in February 2015.
The housing finance company said it is exploring opportunities in the health insurance sector in conjunction with its subsidiary HDFC ERGO General Insurance Company. It is also evaluating opportunities in the acquisition and resolution of stressed assets in the real estate sector.
HDFC said, it may, in the future, require capital in some of its subsidiary companies, namely, HDFC ERGO General Insurance Company, HDFC Education and Development Services Private Limited and HDFC Credila Financial Services Private Limited, amongst others.
While underscoring that it has adequate resources to fund its current mortgage operations, HDFC said there could arise opportunities for organic and inorganic growth in the affordable housing space which may require additional capital.