Mumbai: 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.
ICICI Bank, India’s biggest bank by market value, on Wednesday sought regulatory approval for the domestic half of a planned Rs17,500 crore sale to local and overseas investors. Merrill Lynch and Goldman Sachs Group Inc. are helping the Mumbai-based bank with the sale, the biggest share offering by an Indian company.
State Bank of India (SBI), the nation’s biggest lender by assets, with 100 million customers and more than 9,400 branches, aims to raise as much as $1.5 billion in a share sale this year. Subsidiaries of SBI are also likely to raise funds selling shares.
HDFC Bank had raised $300 million selling shares overseas in January 2005. BLOOMBERG