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Housing Development and Finance Corporation (HDFC) will soon go for a rights issue by offering 5.88 million shares of Rs. 100 each nominal value following a listing on the Colombo Stock Exchange (CSE). Through listing, HDFC plans to raise fresh capital in order to consider corporate loans for property development companies and to enhance the turnover.

"We have already submitted an 'application by introduction' to the CSE seeking a listing on the main board," General Manager/CEO, C.A. Sarathchandra told the Daily News yesterday. The application for a listing has been submitted on the AG's advice and through their sponsoring agents Ernst and Young.

HDFC, a leading housing loan provider in the country currently has a share capital of 20 million shares of which 10 million with Rs. 1,000 million nominal value have already been issued. Out of the first 10 million share capital, 4.12 million are paid up.

Sarathchandra said that the HDFC's intention is to obtain finances through a few private placements after the listing. "We would prefer to have a selected number of investors as strategic partners initially. If not, we may go for a public share issue," he said.

The company's present shareholders' fund is Rs. 750 million and its portfolio is a little over Rs. 5 billion. "Currently, we are borrowing from international agencies such as ADB, USAID, and local institutions such as SLIC and through products such as securitisation from domestic market - local banks have invested their funds in them. HDFC which has been granted the specialised banking status through an amended Act in February this year is planning to earn a turnover of Rs. 2,000 million this year.

Sarathchandra said that the conversion of the HDFC into a licensed specialised housing bank would help the institution to increase its lending in order to achieve this target.

The institution recorded a turnover of Rs. 1,400 million last year. HDFC also caters to about 15% of the annual demand of housing loans in the market. HDFC Chairman A. Kandappah said that the institution will soon be able to claim the largest market share in housing finances.

He said that out of ADB funds the housing component released to all banks, HDFC has utilised 83% and the Government's recent appointment of HDFC as the apex organisation for the newly set up finance for housing loan scheme reflected its prime position in the market.

HDFC shares have been valued at over Rs. 600 each by their auditors Ernst and Young in 2001. Hence the institution hopes to raise over Rs. 1,000 million in the pending share issue, he said. (CJ)

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