Home / Financial News / HDFC Bank raises Rs 9,840 cr from bullish investors

HDFC Bank raises Rs 9,840 cr from bullish investors

HDFC Bank raised Rs 10,000 crores by selling shares in the domestic markets and offering 22 million American Depository Receipts (ADRs) in the US on Thursday, thus opening the floodgates for other companies and banks to raise funds from investors who are keen to bet on the India growth story.  

Bankers said the share sale received overwhelming response from local investors with demand at four times the issue size even though the shares were offered at nominal discount of up to 1 per cent.  As per the term sheet, the QIP issue size was Rs 1,500 crore with an option to raise to Rs 2,000 crores and dilution in the bank’s equity via QIP was 0.58 per cent to 0.77 per cent. The shares were offered at the price band of Rs 1,057 to Rs 1,067 a share.  The bank plans to use the funds to boost its capital adequacy ratio and for lending.

HDFC Bank closed 0.94 per cent up at Rs 1,077 a share on the BSE on Thursday.  HDFC Bank’s ADR issue was the biggest ADRs launched in the US since 2009 from India.

Analysts say investors are betting big on the combined impact of falling inflation, a stable government, robust consumer confidence and expectations of further interest rate cuts which would be very positive for consumption and retail loan growth for Indian banks.

“There is lot of capital available for investing in growth companies. HDFC Bank is the leader in the banking space and a great growth story. There is huge appetite for good quality companies. Domestic mutual funds are flushed with money. Even global liquidity situation continues to remain good with the stimulus in Europe,” V Jayasankar, senior executive director and head of equity capital markets at Kotak Investment Banking said.

HDFC Bank local shares trade at 12 per cent discount to their ADRs. Perhaps that’s the reason why the bank would have opted to do majority of the fund raising in the US market,  he said.

The successful launch of HDFC Bank’s fund-raising comes within a week of Coal India launching its share sale in India which raised Rs 22,600 crore for the Indian government. Two big rights issues are in the offing with Tata Motors planning a Rs 7,500 crore rights issue and State Bank of India planning to raise Rs 15,000 crore. Many other companies are planning qualified institutional placements and initial public offer of shares. “This is the start of a bull run in India. The next big event will be the budget and with a pro-business government at the Centre, we can only see positive for the investors,” said an analyst.

HDFC Bank’s share sale was stuck with the government after confusion over home loan lender HDFC’s 22 per cent stake in the bank. This was due to HDFC’s stake in the bank was breaching the 74 per cent stake mark for foreign investors. Last week, the government of India cleared HDFC Bank to raise funds from ADRs as well as from local investors.

The QIP and ADR issue of HDFC Bank was managed by JM Financial, BoFA Merrill Lynch, Credit Suisse, JP Morgan and Morgan Stanley, Barclays, Goldman Sachs, Nomura and UBS.

Leave a Reply

x

Check Also

Debate on Article 370 marked by posturing, says RSS

The Rashtriya Swayamsevak Sangh (RSS) is recalibrating its discourse on its demand ...

Street cautiously positive on JSPL post coal mine

Jindal Steel and Power (JSPL), which witnessed its lowest point in the ...