HDFC Bank board okays $300 million ADS plan

The HDFC Bank board today approved a proposal to raise capital worth $300 million through an offering of American depository shares (ADS), including a greenshoe option of up to 15 per cent.

The bank also proposes to increase its shareholding in the broking arm HDFC Securities Ltd to 59 per cent from 29.5 per cent at present and make it a subsidiary of the bank. The ADS issue is expected to hit the market in the current fiscal, said a source.

An ADS offering will enable the bank increase its investor base and get a better pricing, he added. The proceeds will enhance HDFC Bank's ability to make loans and provide other financing products to its customers.

This will be the new generation private sector bank's second ADS issue. It raised $150 million in July 2001 at $13.83 per ADS on the New York Stock Exchange. Merrill Lynch & Co and Morgan Stanley Dean Witter & Co were the managers to the issue.

ICICI Bank was the first bank Indian Bank to have floated an ADS issue. The bank floated the ADS in March 2000.

On the Bombay Stock Exchange, the HDFC Bank stock ended today 1.62 per cent down at Rs 404.20 against its previous close of Rs 410.85. FIIs hold 53.96 per cent stake in HDFC Bank. Parent HDFC holds 13.59 per cent and HDFC Investments holds 10.50 per cent. The public holding is 15.12 per cent.