LIC Housing Finance opens $50mn GDR offering

LIC Housing Finance Ltd's (LICHFL) one-crore global depository receipts (GDR) issue opened on Friday. The issue is lead managed by Kotak Investment Bank and Credit Lyonnais Securities Asia Ltd (CLSA).

The housing finance company hopes to raise about $50 million through the GDR issue. The pricing of the issue is expected to be around the domestic market price of LICHFL. The stock is currently ruling at Rs 138.35 on the Bombay Stock Exchange.

Following the GDR issue, the Life Insurance Corporation of India's (LIC) stake in the housing finance arm will decline by around five per cent from 38.5 per cent at present.

The share price of LICHFL today fell marginally by 0.82 per cent to close at Rs 138.35 on the BSE. The stock had touched a high of Rs 141.95 recently.

LICHFL has been attracting interest from foreign institutional investors (FIIs), especially foreign mutual funds such as Templeton and Merrill Lynch.

FIIs, which hold a 20 per cent stake in LICHFL as on March 2004, are likely to rise their holding through the GDR. LICHFL has been exploring options to tap the international market since last year in order to expand its equity base.

"During fiscal 2004-05, with the company targeting a growth of 45 per cent in disbursements at Rs 6,200 crore, we will need to raise funds to the tune of Rs 4,000-4,500 crore," LICHFL director and chief executive A K Dasgupta said.

This is in addition to internal accruals of around Rs 2,000 crore. Besides the GDR issue, LICHFL will also raise funds from the domestic money market.

LICHFL, which disbursed Rs 4,104 crore of loans in fiscal 2004, has an eight per cent market share and ranks fourth in the industry close on the heels of State Bank of India (SBI). SBI has a market share of nine per cent.