LIC raises stake in HDFC Bank to over 5 per cent

Country's largest insurer Life Insurance corporation of India has increased its stake in HDFC Bank to over five per cent following acquisition of shares from the open market.LIC purchased 1.6 lakh shares from the open market hiking its stake in
the company to 5.01 per cent.The equity holding of the insurer increased by 0.04 per cent from 4.97 per cent earlier.

As on June 2008, LIC holding in the bank stood at 2.15 per cent which went up to 4.7 per cent in September this year.Yesterday, LIC hiked its stake in Vijaya Bank to 9.53per cent by acquiring shares worth nearly Rs 30 crore from the open market.

Domestic institutional investor acquired over 94.29 lakh shares representing 2.18 per cent stake in the state-run lender.Before the acquisition, LIC held over 3.18 crore shares representing 7.38 per cent stake in the bank which subsequently increased to 9.53 per cent after the purchase.

HDFC to raise Rs 4,000 cr debt

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.

HDFC Bank raises $ 607 mn

India's private sector lender HDFC Bank Ltd. has raised $607 million after pricing the issue of 6.6 million American Depository Shares (ADSs) at $92.10 each.

The offering of New York Stock Exchange-listed shares has an over allotment option of $91 million. HDFC Bank, valued at $10 billion, said each ADS represents three equity shares of the bank.

It said the offer price was equivalent to a price of 1,235.06 rupees per equity share, 3 percent above Tuesday's closing price of HDFC Bank's shares on the Mumbai exchange.

"Gross proceeds from the offering are expected to be approximately $607 million and will be used to strengthen the bank's capital base to support future growth," it said in a statement.

Read more in The Economic Times article.

UTI Bank hires Citi, Goldman for $600 mn GDR

UTI Bank Ltd has hired Citigroup and Goldman Sachs to handle its $600 million global depository receipt sale at the end of June, a person familiar with the matter said on Friday, 22 June.

UTI Bank, which on 1 June said it would issue up to 42.4 million new shares, will be selling up to 13% of its enlarged share capital, the source said.Analysts say the funds from the offering will be used to meet capital requirements, as UTI Bank and most lenders in India are facing huge loan demand.

UTI Bank shares have risen nearly 31% this year, outperforming a 5% increase in India’s benchmark index.Indian lenders have some of Asia’s biggest fund-raising plans this year, with top private bank ICICI Bank selling up to $4.9 billion worth of shares and smaller rival HDFC Bank planning a $1 billion offering.

Two teams of bankers will pitch UTI Bank’s deal to investors in the United States, Asia and Europe, with books opening on 26 June and pricing expected for 29 June, the source said.

Merrill, UBS may help HDFC Bank overseas

HDFC Bank Ltd, India’s third biggest by market value, may hire Merrill Lynch & Co. and UBS AG to help raise $690 million (Rs2,829 crore) selling shares to overseas investors, two people with knowledge of the matter said.

The bank is likely to sell the shares in July, they said, declining to be identified before an announcement.HDFC Bank had on 17 May said it planned to raise Rs4,200 crore, including the sale of Rs1,390 crore to its founder, Housing Development Finance Corp. Ltd (HDFC), to fund accelerating demand for loans.

“Stronger banks out of India which want to raise capital will get good demand and investors will also make a good return,” said Sandip Sabharwal, who manages $245 million in equities as chief investment officer at JM Financial Mutual Fund in Mumbai.

Indian banks, led by ICICI Bank Ltd, are selling shares to fund growing demand for credit in an economy which has expanded an average of 8.6% in the past four years, trailing only China among the world’s major economies.

New loans grew by 28% in the year to March, slowing from 35% as the central bank raised rates to contain inflation.Mark Panday, a UBS spokesman based in Hong Kong, declined to comment. Rob Stewart, a Hong Kong-based spokesman for Merrill Lynch, also declined to comment, as did Neeraj Jha, a Mumbai- based spokesman for HDFC Bank.
HDFC Bank’s sale of shares to HDFC will enable the founding company to maintain its shareholding at about 23%, the bank had said on 17 May.

Read more in The Livemint article.

HDFC Bank to raise $688 m via ADRs

HDFC Bank will raise the entire Rs 2,810 crore (around $688 million) of its fresh public issue of equity through American Depository Receipts (ADRs). The bank is looking at raising Rs 4,200 crore (over $1 billion) of additional share capital, of which over a quarter will be raised through a preferential issuance to HDFC. The top three private sector banks — ICICI Bank, HDFC Bank and UTI Bank — are looking at raising around $7 billion in equity over the next couple of months.

ICICI Bank is looking at raising $5 billion, of which around half will be raised from the overseas market. It is likely to hit the market in the latter half of this month. UTI Bank is also looking at raising around $1 billion, of which around Rs 1,754 crore will be through a preferential issue to the promoters while the remaining Rs 2,326 crore will be through a global depository issue.

HDFC Bank is likely to hit the market before the end of July. The bank, according to sources, is likely to appoint Merrill Lynch and UBS as lead managers for the issue. A final decision will be taken in the next couple of weeks when it has to file under SEC guidelines.

Read more in The Economic Times article.

HDFC to raise Rs 3,114cr from Citi, Carlyle

The board of directors of Housing Development Finance Corporation (HDFC), which met today, approved a proposal to raise up to Rs 3,114 crore by issuing 1.80 crore shares on preferential basis at Rs 1,730 per share to Citigroup Strategic Holdings Mauritius and CMP Asia (The Carlyle Group).

According to a release issued by HDFC to the BSE today, the holding of Citigroup will move up to 9.55% after the issue from the current level of 9.15%, and Claryle Group will hold 5.63%.

The meeting also approved a proposal to increase authorised share capital of the corporation from Rs 275 crore consisting of 27.5 crore equity shares of Rs 10 each to Rs 325 crore consisting of 32.5 crore equity shares of Rs 10 each.

The money would mostly be used to buy shares of its subsidiary, HDFC Bank, and invest in the life insurance subsidiary.

The preferential allotment to Citigroup is being made to ensure the US financial services group's stake in the mortgage lender remains at 12.3% after the allotment to Carlyle.

LIC shortlists partners for credit card venture

Life Insurance Corporation (LIC) of India has shortlisted ICICI Bank, HDFC Bank, UTI Bank, Standard Chartered Bank and Visa as partners for its credit card venture.

Apart from the shortlisted banks, the corporation may also rope in one more partner, probably Corporation Bank, to ensure that the credit card company is not a subsidiary. LIC wants to call shots in the card company, but for regulatory reasons does not want the proposed venture to be a subsidiary.

After putting its plans on the back burner for a year, LIC started moving again in 2007. Last month it appointed a chief executive Hemant Bhargava for the credit card project. Mr Bhargav had earlier headed LIC’s microfinance and international businesses.

Read more in The Economic Times article.

HDFC Bk to raise $1bn

The board of directors of HDFC Bank, which met today, approved a proposal to raise additional capital of Rs 4,200 crore or $1 billion, whichever is higher.

According to a release issued by the bank to the BSE today, the proposed equity issue will result in the reduction of the present shareholding of the promoter group, the HDFC Group, which is currently at 21.56%. "With a view to maintain the shareholding of the promoter group at or about 23% of the enhanced capital base, it has been proposed to offer to the promoter group, by way of preferential offer, 1,35,82,000 equity shares of Rs 10 each at an issue price of Rs 1,023.49 per share," the release added.

The balance amount of the proposed equity capital may be raised either as domestic public offering or as public or private offerings in one or more international markets.