HDFC Bank today exercised the greenshoe option of $22.5 million, thus raising the size of its American depositary shares (ADS) to $172.5 million. The option was exercised at $13.83.
Each ADS represents three underlying shares. The bank, which listed its ADS on the NYSE 20, was quoting at $15.52 in early trades.
HDFC chairman Deepak Parekh said the bank today exercised its greenshoe option. The bank had the choice of exercising the greenshoe option within the week.
The pricing of the ADS at $13.83 worked out to around Rs 217 per share. "The pricing was at an average of the closing prices of the previous 10 trading days. Foreign institutional investors (FIIs), which hold the shares here, tend to sell in the Indian markets so that the price gets lower and they buy it cheaper in the ADS market. The ADS market is much flexible for them. This is also one of the reasons that they have been allotted less shares," said Parekh.
After exercising the greenshoe option, HDFC's holding in the bank has come down to 24.8 per cent from 28.3 per cent.
Other major institutional stake holders whose stake will go down after the issue are Chase group 11.7 per cent (13.4 per cent) and Bennett Coleman Group 7.4 per cent (8.4 per cent).
The bank will use the ADS proceeds to reduce its overnight borrowings and also to fund future growth.
The bank also earns a major amount of its revenues (44.1 per cent) through retail banking while its revenue through wholesale banking are 43.4 per cent and treasury operations are 12.5 per cent for the year ended March 2001.
