HDFC board approves proposal to raise Rs 4000 cr through NCDs

MUMBAI: The board of HDFC on Wednesday approved a proposal to raise Rs 4000 cr. It will raise the money through a combined offering of secured redeemable non-convertible Debentures (NCDs) of up to Rs 4,000 crore along with warrants. This is the first time in recent years a major financial institution is hitting the market with such an instrument.

The warrant-holder can exchange the warrants to purchase equity shares of HDFC at a future date. The quantum of premium to be paid at the time of purchasing the equity shares will be determined at the time of issue of the Warrants. Both the NCDs and Warrants will be listed separately in the stock exchanges. The conversion will happen at a premium to current market price. The stock ended today at Rs 2355.40 on the Bombay Stock Exchange, 1.2% higher than Monday���s close.

If the warrants are exchanged the maximum dilution that could take place in future would not exceed 3.5% of the expanded equity shares. The NCDs together with the warrants will be issued to Qualified Institutional Buyers on a Qualified Institutional Placement basis pursuant to and in accordance with the provisions of SEBI DIP Guidelines, the company said in a filing with the stock exchange.

The issue of NCDs with warrants is subject to the approval of the shareholders at the Annual General Meeting to be held on July 22, 2009.