HDFC locks in Rs 10,400 cr; NCDs, warrants list at big premium

In two highly successful offerings, mortgage giant HDFC Ltd has raised Rs 5,000 crore from low- cost non convertible debentures (NCDs) and a further amount of about Rs 5,400 crore would come in from warrants, both of which got listed with a huge premium today.

"Total amount we have received is Rs 5,051 crore, including Rs 5,000 crore from the NCD and Rs 51 crore is the face value of the warrants, which on conversion will get us an additional Rs 5,384 crore," HDFC Vice Chairman and CEO Keki Mistry told reporters here.

Mistry said money raised through NCD issue will be deployed for regular lending purposes while the conversion of warrants will beef-up the capital, which is currently at "reasonably comfortable" levels in the future.

"The advantage of this instrument is that it gives us the ability to generate money today and generate capital at a future date," Mistry said, adding that the need for capital can be necessitated due to a variety of reasons including balance sheet growth and also maintaining its stake in HDFC Bank.

The NCDs were offered at a coupon rate of 1.43%, but were trading at 8.54% in the debut trade today.

Similarly, the warrants generated total volumes of over three crore in the first day of trade on the BSE and the NSE. As against the issue price of Rs 14, the warrants were listed at a discovered price of Rs 146.05 and closed at the upper circuit of 10% at Rs 160.65 at the two bourses.

The warrants also generated huge unsatisfied demand as they were locked in upper circuit.

Mistry said the NCD issue, which saw sale of 5,000 secured NCDs of the face value of Rs 1 crore each, comes at a coupon of 1.43%.

It issued 3.65 crore warrants at Rs 14 per warrant, and the warrant holder has the right to exchange one warrant for one equity share of the company in the next three years at a pre-agreed price of Rs 1,475.

The conversion price of Rs 1,475 is a 25% premium over the floor price as on September 30, determined by a formula announced by Sebi, he said.

Assuming all the warrant holders convert into equity, the dilution in the stock will not be over 2.2%, he said.

Both the NCDs as well as the warrants were issued to qualified institutional buyers domestically, the company said, adding that the NCDs have been listed on both BSE and NSE.

Kotak Mahindra Capital Company, Axis Bank, Axis Capital, Citigroup Global Markets India, HDFC Bank, ICICI Bank, ICICI Securities, IDFC Securities, IndusInd Bank and JM Financial Institutional Securities acted as global coordinators and book running lead managers for the issue.

HDFC's scrip closed 0.17% higher at Rs 1,258.10 apiece on the BSE, as against a 0.55% gains in the benchmark.