Tag: Housing Development Finance Corporation

HDFC plans to raise Rs 6,000 crore via bonds, BFSI News, ET BFSI

Banking & Finance

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The country’s largest mortgage lender Housing Development Finance Corporation (HDFC) will raise up to Rs 6,000 crore by issuing bonds on a private placement basis to augment its long term resources. The bonds in the nature of secured redeemable non-convertible debentures (NCDs) have a base issue size of Rs 3,000 crore with the option to retain oversubscription up to Rs 3,000 crore, HDFC said in a regulatory filing on Monday.

“The object of the issue is to augment the long-term resources of the Corporation. The proceeds of the present issue would be utilised for financing/refinancing the housing finance business requirements of the Corporation,” it said.

The three-year tenor bonds rated ‘AAA‘ by Crisil and Icra will be up for redemption on September 30, 2024.

The bids for subscription will open on September 29, 2021, and close on the same day.

HDFC said the coupon rate on the bonds would be payable at a fixed spread of 80 basis points (0.80 per cent) over the benchmark that will be reset on a quarterly basis.

The benchmark will be a three-month T-bill (treasury bill) as published by FBIL and sourced from Bloomberg, it added. If Bloomberg data is not available, the simple average of FBIL 3-months T-bills closing rate, as published by Financial Benchmarks India Pvt Ltd (FBIL) may be recognised with certain parameters.

The first such quarterly setting of the coupon rate for September 30, 2021, would be 4.13 per cent per annum, HDFC said. Shares of HDFC closed flat at Rs 2841.10 apiece on BSE. PTI KPM BAL BAL



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HDFC Bank to buy stake worth over Rs 1,906 crore in group’s general insurer from parent, BFSI News, ET BFSI

Banking & Finance

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HDFC Bank on Saturday said its board has given its approval to buy more than 3.55 crore shares in group firm HDFC ERGO General Insurance Company for over Rs 1,906 crore from the parent company Housing Development Finance Corporation (HDFC). “The board of directors of HDFC Bank at its meeting held on June 18, 2021 has approved the purchase of 3,55,67,724 equity shares of Rs 10 each, representing 4.99 per cent of the outstanding issued and paid-up capital of HDFC ERGO General Insurance Company Ltd from HDFC Ltd,” HDFC Bank said in the filing.

HDFC is the promoter and related party of the bank.

The purchase is to happen at a price determined on an independent evaluation report, subject to receipt of necessary approvals including regulatory approvals and approval from shareholders of the bank, it said.

“The aggregate consideration for purchase of 3,55,67,724 shares of HDFC ERGO is Rs 1,906.43 crore, i.e. Rs 536 per share,” it said further.

HDFC ERGO General Insurance had a gross written premium of Rs 12,444 crore for the year ended March 2021. The company’s net worth stood at Rs 2,927 crore.

The private sector general insurer is one of the fastest growing companies among the peers with its gross written premium growing at a 35 per cent compounded annual growth rate (CAGR) over the last 13 years.

“The proposed transaction enables the bank to participate in the growth opportunity of HDFC ERGO and augment HDFC ERGO’s growth prospects leading to long-term value creation by HDFC ERGO to its shareholders,” it said.

The bank has been a distribution partner of the insurer since 2009.

The transaction, indicative to be closed by September this year, will require approval from insurance sector regulator Irdai and banking regulator RBI. Any other necessary regulatory or government approval will be evaluated prior to the share purchase agreement, HDFC Bank said.



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HDFC Capital, Cerberus set to pair up for $1 billion real estate investment fund, BFSI News, ET BFSI

Banking & Finance

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HDFC Capital and global alternative investment major Cerberus Capital Management LP have formed a partnership to create a fund that will focus on high-yield opportunities in Indian residential real estate. The size of the proposed fund will be upwards of $1 billion, said people familiar with the development.

The fund, to be set up through an affiliate of New York-headquartered Cerberus Capital, will target stressed projects, purchase inventory and provide last-mile funding for under-construction residential projects.

“Housing is an integral part of our economy and because of its linkages to other industries and to the labour market, it is a critical sector for ensuring economic growth,” Deepak Parekh, chairman of Housing Development Finance Corporation (HDFC), of which HDFC Capital is a subsidiary, told ET.

The deal is another sign of foreign investment firms’ growing interest in India. “Despite the massive need for housing in the country, a large number of launched projects are in distress, leading to a complete standstill in execution,” said Parekh. “This platform will provide much-needed financing for housing projects and help in delivery of finished units to home buyers.” HDFC and Cerberus declined to comment on the size of the proposed fund.

Currently, the government-backed Special Window for Completion of Construction of Affordable and Mid-Income Housing (SWAMIH) projects is the only large dedicated federal financing pipeline for such projects.

Allow partial exit to lenders

“The structure of the HDFC-Cerberus fund will make it complementary to the government-led SWAMIH fund, as it will also allow partial exit for existing lenders of the project, thereby increasing the scope of projects that can be covered for resolution,” said Vipul Roongta, managing director, HDFC Capital.
HDFC Capital, Cerberus set to pair up for $1 billion real estate investment fundWhile HDFC and other financial institutions have invested in SWAMIH fund, the HDFC-Cerberus fund will be the only private sector initiative with an objective of resolving the issue of stuck and distressed housing projects.

“Cerberus has a long track record of partnering with businesses and properties around the world,” said Frank Bruno, co-chief executive, Cerberus. “We are able to provide tailored solutions in sectors with dislocated funding channels in various forms, such as the purchase of assets, creation of operating and lending platforms, and provision of structured capital to best-in-class operators.”

Cerberus has been active in India since 2019 across verticals including acquisition of non-performing assets, provision of capital to corporates and creation of financial services and real estate platforms.



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