New Delhi, October 12, 2006—International
Finance Corporation, the private sector arm of the World Bank Group, will
invest $100 million in Upper tier II subordinated bonds with a final maturity
of 15 years to be issued by HDFC Bank Limited. The investment will help
HDFC Bank augment its capital base primarily to support its growing asset
business and will also increase the bank’s long term resources.
Lars Thunell, Executive Vice President of IFC who is currently visiting
India said that “IFC’s investment in HDFC Bank reflects our larger goal
of developing and strengthening the financial sector in emerging markets.”
“IFC’s quick response to RBI’s Upper Tier II guidelines helps strengthen
the long term growth strategy of HDFC Bank. It will help further improve
the Bank’s financial fundamentals by strengthening its capital adequacy
and diversifying its funding sources. It will help the bank set a new benchmark
for raising Upper Tier II Capital in the Indian banking industry,” explained
Aditya Puri, Managing Director, HDFC Bank.
Iyad Malas, Director, South Asia, elaborated, “IFC has a long and fruitful
relationship with Housing Development Finance Corporation (HDFC), the Bank’s
promoter. IFC had helped institute HDFC in 1977. We are pleased to continue
to work with HDFC and initiate a new relationship with HDFC Bank with this
investment. The investment will strengthen the efficiency and reach of
the banking sector in India by supporting a private sector bank.”
The bonds will qualify as Upper Tier II Capital per RBI guidelines. To
date, only a few private sector banks have successfully issued UT2 Capital
due to the complexity and long term nature of these products. HDFC Bank
is a domestic AAA rated institution promoted by Housing Development Finance
Corporation, a housing finance institution that IFC helped found in 1977.
HDFC Bank is listed on the Mumbai and National Stock Exchanges, and the
New York Stock Exchange.
The International Finance Corporation, the private sector arm of the World
Bank Group, is the largest multilateral provider of financing for private
enterprise in developing countries. IFC finances private sector investments,
mobilizes capital in international financial markets, facilitates trade,
helps clients improve social and environmental sustainability, and provides
technical assistance and advice to businesses and governments. From its
founding in 1956 through FY06, IFC has committed more than $56 billion
of its own funds for private sector investments in the developing world
and mobilized an additional $25 billion in syndications for 3,531 companies
in 140 developing countries. With the support of funding from donors, it
has also provided more than $1 billion in technical assistance and advisory
services. For more information, visit www.ifc.org.