KKR joins $1.75b investment in India's HDFC
KKR has joined a group of investors including Singapore’s GIC Private and the Ontario Municipal Employees Retirement System (OMERS) to commit INR111 billion ($1.75 billion) to listed Indian financial institution HDFC.
Premji Invest, the family office of Wipro founder Azim Premji, and French asset manager Carmignac Group also took part in the investment, according to a filing.
HDFC will issue 64 million new shares to the investors at INR1,726.05, a slight discount to the January 12 closing price of INR1,753.10. GIC will take 30.1 million shares, while OMERS, KKR, Carmignac and Premji Invest will take 10 million, 9.3 million, 9.1 million and 5.8 million shares, respectively. The new issue represents a 3.9% stake in the company.
HDFC plans to use the new capital to invest in its banking arm, HDFC Bank. The parent will commit INR85 billion to a share issue by the subsidiary, maintaining its holding at 21%. HDFC will also invest in other subsidiaries and explore opportunities in health insurance and real estate.
Founded as a mortgage lender in 1977, HDFC has become a financial services conglomerate with interests in banking, insurance, and asset management. In its most recent annual report, the company recorded revenue of INR332 billion for the year ended March 2017, up from INR310 billion the previous year. Over the same period, net profit grew from INR71 billion to INR74 billion.
KKR is currently investing its third Asia fund, which closed last year at $9.3 billion. The firm has a significant presence in India's financial services sector, having purchased Avendus Capital in 2015 and invested in several non-banking finance companies (NBFCs), including agriculture-focused Magma Fincorp. It also founded KKR India Financial Services in 2015 and is a sponsor, alongside GIC and The Townsend Group, of a real estate-focused NBFC.
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