HDFC Bank plans $300 m ADR

HDFC Bank will come out with a $300 million American depository receipt (ADR) issue by mid-January, 2005.

Deepak Parekh, chairman, Housing Development Finance Corporation (HDFC) said: "We are working with the US Securities and Exchange Commission and due diligence is being done." No lead manager has yet been appointed, Parekh said.

The bank's board last month approved raising resources up to $300 million, including a greenshoe option of 15 per cent. Meanwhile HDFC is still waiting for the necessary permission to raise $500 million foreign currency convertible bond (FCCB) issue. It has received board approval to come out with the FCCB, but is in no hurry to raise overseas funds.

"We are still toying with the idea," Parekh told the media on the sidelines of a one-day seminar on 'Improving India's Investment Climate', hosted jointly by the World Bank and the Confederation of Indian Industry.

HDFC hopes to list its life insurance joint venture, HDFC Standard Life Insurance Company, in the next couple of years. "Listing is part of the licence conditions for insurance companies. However, we need to break even first," Parekh said.

He expects the life insurance joint venture to break even by March 2006, and added that listing of the non-life company, HDFC Chubb, would take more time.

According to the Insurance Regulatory and Development Act, Indian promoters have to bring down their holdings to 26 per cent by the 10th year of operations through an initial public offer.

Going by the current cap of 26 per cent on foreign direct investment, this would mean both the Indian and foreign partners would have an equal shareholding.