GIC Housing to raise Rs 24 cr via rights, bonus issues

GIC Housing Finance plans to raise Rs 24 crore in this financial year via a rights issue (Rs 9 crore) and a bond issue (Rs 15 crore) in order to grow its business and boost capital adequacy ratio to 15 per cent.

Under the proposed rights issue, existing share holders will be issued one share for every two shares held.

"The rights issue will be at a premium. Though the company has a networth of Rs 100 crore, it has a low capital base of Rs 18 crore. As we never declared a bonus, the issue will be at a suitable discount to the market price so that existing investors are rewarded suitably," A K Guha, managing director, said.

The shareholders of GIC Housing Finance are : GIC (32.65 per cent); IFCI (7.50 per cent); UTI (5.50 per cent); HDFC (one per cent); and the balance is held by the public. The NBFC expects to raise Rs 9 crore via the rights issue before September 30, 2004.

Post-rights issue the capital of the company will go up by 50 per cent to Rs 27 crore.

The non-banking finance company, which reported a 68 per cent jump in its net profit at Rs 11.11 crore in 2003-04 as against Rs 6.61 crore in the previous year, expects sanctions to touch Rs 850 crore in FY 2004-05 (Rs 550 crore in FY 2003-04) and disbursals to reach a level of Rs 750 crore (Rs 450 crore).

GIC HF expects to pare its cost of funds to 6-6.25 per cent levels in FY 2004-05 as against 6.83 per cent in the previous year.

Guha pointed out that competition on the home loans front has increased in the last three years with commercial banks jumping into the fray.

Banks now account for 67 per cent of the total home loans disbursed and HFC, the balance. Three years ago the situation was the other way round.