Covid-19: Axis Bank, HDFC raise Rs 10,000 cr each via QIPs to absorb risk
Private lender Axis Bank has raised Rs 10,000 crore through qualified institutional placement (QIP) of shares, which the lender will use to bolster its capital adequacy, fund its growth strategy and absorb any kind of risk emanating from the pandemic.
Similarly, mortgage lender Housing Development Finance Corporation (HDFC) on Tuesday said, it has raised Rs 10,000 crore through the issue and allotment of 56.8 million equity shares of face value of Rs 2 each at an issue price of Rs 1,760 per equity share.
Axis Bank’s issuance was oversubscribed with the aggregate final transaction size being Rs 10,000 crore, it said. The QIP issuance was done at a price of Rs 420.1 per equity share, a 5 per cent discount to the floor price of Rs 442.19.
Shares of the bank closed about 4 per cent up at Rs 448 on the BSE Sensex, after the announcement. Shares of HDFC closed 1.48 per cent higher at 1,825.35 on the BSE.
In a statement, Axis Bank said, despite a challenging macroeconomic environment, the placement witnessed strong reception from global and domestic investors, including several large foreign portfolio investors, domestic mutual funds and insurance companies. However, it did not disclose names.
HDFC said, it has received Rs 307.03 crore upfront through the issue and allotment of 17 million warrants at an issue price of Rs 180 per warrant and raised an amount of Rs 3,693 crore through the issue of redeemable non-convertible debentures at par, for a tenor of three years, carrying an annualised coupon rate of 5.40 per cent per annum.
“The issue has been oversubscribed overall. The equity shares and warrants offered in the QIP have been subscribed by 326 diverse marquee institutional funds,” the firm said. It added the proceeds will be used for general purposes and for financing organic and inorganic business opportunities that may arise, including funding expansion plans of subsidiaries and associate firms.
Recently, many private sector lenders have raised funds to create a buffer so that they are in a position to absorb any kind of shock emanating from the pandemic. Many state owned lenders like Punjab National Bank, Bank of Baroda and Canara Bank are also in the process of raising funds.
Amitabh Chaudhry, MD and CEO of Axis Bank, said the bank has received great response from global and local investors alike. “We believe the bank is well-placed to leverage all possible growth opportunities as the economy opens up.”