Housing Development Finance Corp (HDFC) – the largest mortgage lender of the country today said its board has approved funding raising worth Rs 5,000 crore simultaneously by secured redeemable non-convertible debentures along with warrants.
The lender will seek shareholder’s approval in its annual general meeting (AGM) scheduled 28 July. The warrant holder will be entitled to exchange the warrants with the equity shares of HDFC at a premium and in line with present norms, the financier said in a notification to the exchanges.
“The maximum dilution that could take place in future, if all the warrants are exchanged into equity shares of the corporation, would be 2.2% of the expanded equity share capital,” HDFC said. The NCDs together with the warrants will be issued to qualified institutional buys, it further added.
According to sources familiar with the development, the funds will be used for making provision for deferred tax liability, financing business growth and also could be used to increase or retain current stake in HDFC Bank. HDFC’s stake in HDFC Bank – the second largest private sector bank -- has fallen to 21.7% from 22.5% after the latter’s qualified institutional placement.
HDFC will also have to entire provision for deferred tax liability over the next three years, -- 25% in the first two years and 50% in the third year.
In line with the norms of National Housing Bank – the regulator for home financiers --, HDFC had to set aside Rs.120 crore as deferred tax liability during January –March quarter and Rs 384 crore for 2014-15. HFDC posted 8% year-on-year growth in standalone net profit for the March quarter to Rs 1,862.43 crore.
The outstanding loan book f HDFC grew by 16% in 2014-15 which stood at Rs 2.28 lakh crore compared with Rs 1.97 lakh crore as on March of 2014, after taking into account the loans sold during the year.
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