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| LIC Housing Fin to issue 10 mn shares |
| BS Reporter / Mumbai Jun 04, 2009, 00:58 IST |
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LIC Housing Finance, India’s second largest housing finance company, plans to raise capital by issuing 10 million shares through the qualified institutional placement (QIP) route.
The issue is to be approved by the housing finance company’s (HFC) share holders in the annual general meeting (AGM) scheduled for 21 July.
QIP is the private placement of equity shares–which can be converted into equity by a listed company–with qualified institutional buyers approved by the market regulator Securities and Exchange Board of India (Sebi).
R. R. Nair, chairman and managing director of LICHF said, “Our business is increasing and our growth has been good. At present, our CAR (capital adequacy ratio) is above the mandated level. But we wanted to take care of our CAR in advance to keep up with our growing business.”
LICHF’s CAR, which is a lender's capital as a proportion of total risk-weighted assets, was 13.5 for the quarter and year ended 31 March, 2009. HFCs are mandated by the Reserve Bank of India (RBI) to maintain a CAR of 12 per cent.
The quantum of capital to be raised by the QIP will only be clear once the issue price is decided. As per regulatory norms, the price of equity allotted through QIP is derived from the share’s average traded price during the previous 15 days. LICHF’s shares were at trading at Rs 528.0 at the close of trading on the Bombay Stock Exchange on Wednesday. The company is majority-owned by the public sector insurer Life Insurance Corporation of India, which had a 40.84 per cent stake as on March 31, 2009.
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