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IDFC likely to raise Rs 800-1000 crore captial via QIP or FPO

A quick back of the envelope calculation suggests that at CMP of Rs 142/share, IDFC will be looking for a post issue share dilution of about 3.6-4.4%.

, ET Now|
Last Updated: Sep 05, 2014, 04.20 PM IST
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A quick back of the envelope calculation suggests that at CMP of Rs 142/share, IDFC will be looking for a post issue share dilution of about 3.6-4.4%.
A quick back of the envelope calculation suggests that at CMP of Rs 142/share, IDFC will be looking for a post issue share dilution of about 3.6-4.4%.
MUMBAI: IDFC, which is in the process of converting into a bank, is soon looking to raise capital in order to cut its foreign shareholding to below 50 per cent and meet RBI bank shareholding norms.

IDFC is looking to test markets for a QIP offering size worth Rs 800-1000 crore, say sources. There is also a possibility that IDFC may raise capital via FPO.

Kotak Mahindra Bank, JP Morgan, Credit Suisse, ISec are likely bankers to the issue.

A quick back of the envelope calculation suggests that at CMP of Rs 142/share, IDFC will be looking for a post issue share dilution of about 3.6-4.4 per cent.

The offering is likely to primarily to domestic investors as IDFC is seeking to bring the foreign shareholding down to below 50 per cent. FII shareholding in IDFC stands at 51.8 per cent as of June 2014.

Currently IDFC is sufficient on capital (Capital adequacy of 23.9 per cent, Tier I capital of 21.6 per cent) and further capital raising will mean that IDFC need not raise capital for at least for next 2-3 years.

Although the capital raising will further impact ROEs, there is likelihood that IDFC receives good investor response as there will be no further capital raising atleast for next 1-2 years.

Also IDFC is likely to benefit positively from the RBI norms for infrastructure financing which will reduce the impact on ROEs.

Brokerages remain bullish on IDFC with Axis Capital having a BUY rating of Rs 172, ICICI Securities having a BUY recommendation with target price of Rs 213.

Stock data: 52week high/low Rs 166/Rs 82.

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