HDFC: HDFC board clears Rs 11,104 crore fund raise, looking to buy health insurer
MUMBAI: HDFC has approved a preferential issue of shares worth Rs 11,104 crore to five investors; GIC of Singapore, OMERS Administration (a Canadian pension fund), KKR, Carmignac Group, and Premji Invest. The mortgage giant has said that it is looking to buy out a health insurance company together with its subsidiary HDFC Ergo General Insurance and plans to float a vehicle to acquired stressed real estate projects. Most of the preferential issue funds (Rs 8,500 crore) will go in to maintaining its stake in HDFC Bank, which is floating a Rs 24,000 crore equity issue on its own.
A committee of directors which approved the fund raising also recommended the issue of equity shares under a Qualified Institutions Placement (QIP) basis for an amount not exceeding Rs 1,896 crore. A QIP has to be completed within 12 months from the date of shareholders’ approval according to Sebi norms.
The lion’s share of the investment in the preferential issue (47 per cent) will come from GIC Singapore through its affiliate Waverly. The Singapore government fund will pick up 3.01 crore shares representing nearly 1.8 per cent of the expanded equity base with an investment of Rs 5,200 crore. OMERS Administration Corporation, the administrator of the pension plan for Ontario’s municipal employees (OMERS), Canada will get 1 crore shares representing. 6 per cent of the diluted equity capital for Rs 1726 crore. Silverview Investments Pte Ltd. (an affiliate of global investment firm KKR) will invest Rs 1600 crore while Carmignac Group, France (represented through five group entities has chosen to invest close to Rs 1578 crore. Both groups have picked up close to 0.5 per cent of HDFC’s expanded equity through the fresh issue of shares. Premji Invest will be putting in close to Rs 1,000 crore
“The Corporation is also exploring inorganic opportunities in the health insurance sector in conjunction with its subsidiary, HDFC ERGO General Insurance Company Limited and is evaluating opportunities in the acquisition and resolution of stressed assets in the real estate sector” HDFC said in a statement. Besides this HDFC will also need capital to sponsor funds it has set up to invest in the equity and mezzanine debt of affordable housing projects, support capital requirements of HDFC Bank and other subsidiaries and capitalise on organic and inorganic growth opportunities in the affordable housing finance space, the statement said.