Mortgage lender Housing Development Finance Corporation (HDFC) will be raising Rs 4,000 crore ($1 billion) debt to finance its stake purchase in HDFC Bank. The debt will be raised over a timeframe of 18 months.HDFC Bank recently announced the acquisition of Centurion Bank of Punjab in an all-stock deal. Following this, HDFC Bank announced a private placement of equity to HDFC to enable the mortgage lender to maintain its stake at the current level of 23.3 per cent. This entails an investment of almost $1 billion by HDFC, according to a sources.
The the possibility of an equity issue in the near future by HDFC has been ruled out and it would instead use the option of raising debt to finance its purchase.The merger paved the way for the creation of the country's largest private sector bank in terms of branch network. The combined entity will have a nationwide network of 1,148 branches. ICICI Bank has close to 955 branches.
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