LIC Housing Finance (LICHF) is planning to raise fresh equity capital through qualified institutional placement (QIP). The company would issue fresh equity shares to the tune of 10 per cent of its total paid-up capital and existing shareholders are expected to subscribe to it proportionately. The total paid-up capital of the company is estimated at around Rs 85 crore.
“If we get suitable valuations and if the market improves, we would like to avail of this route (QIP). But with a capital adequacy ratio of 16 per cent, we do not have any compulsion to raise capital in the current financial year,” said LICHF Director and Chief Executive RR Nair.
Currently, Life Insurance Corporation of India (LIC), which is also the promoter of LICHF, holds a 40.84 per cent stake in the company, followed by foreign institutional investors (FIIs) with a 20.61 per cent stake. The remaining is held by the public.
QIP is the private placement of equity shares – which can be converted into equity by a listed company – with qualified institutional buyers approved by the market regulator Securities and Exchange Board of India (Sebi).
Without divulging further details, Nair added that the promoter’s shareholding would remain the same after the issue. Going by present valuations, LICHF could raise around Rs 240 crore through the issue, including the premium. As per regulatory norms, the price of equity allotted through QIP is derived from the share’s average traded price during the previous 15 days.
Since the global economic downturn intensified in October, housing finance companies have been facing difficulties in raising funds. In fact, LICHF is only the second company which is planning to raise capital through the QIP route, after the country’s second-largest realty player Unitech announced its plans to raise Rs 1,250 crore through this route to clear its debt obligations.
Meanwhile, the second-largest housing finance company in the country is planning to grow its disbursements by 25 per cent during 2009-10.
“Our disbursements during 2008-09 grew by around 24 per cent to Rs 8,700 crore and, by March next year, we would like to disburse Rs 11,000 crore,” Nair said.
Talking about the present home loan market, Nair said that disbursement in March surged by 42 per cent due to property prices falling down.
“Market sentiments had improved in the last two months. We disbursed around Rs 1,250 crore in March alone, compared to Rs 885 crore in the corresponding period last year,” he said.
