Mumbai, July 18: HDFC Bank has raised around $607 million from its American depositary shares (ADS) that were priced at $92.10 each. The proceeds will be used to strengthen the private bank’s capital base to support future growth. One ADS represents three equity shares.

HDFC Bank had offered 6,594,504 ADSs and the price was equal to the volume weighted average price of these shares on the NYSE on July 17.

The offer price is equivalent to Rs 1,235.06 per share, which is a premium of 3 per cent over the closing price of the bank on the National Stock Exchange on July 17.

The underwriters have the right to purchase up to an additional 989,176 ADSs at the public offering price to cover over allotments. The bank can, therefore, raise $698 million if this option is exercised.

The bank is planning to raise a combined amount of $1 billion or Rs 4,200 crore that includes a preferential offer to its parent — the Housing Development Finance Corporation. Last month, HDFC Bank said to maintain the shareholding of the promoter group at or about 23 per cent of the enhanced capital base, it would make a preferential offer of 13,582,000 shares at an issue price of Rs 1,023.49 per share.

Banks have been raising funds through different instruments in the past few months to meet the demand for capital. Recently, ICICI Bank completed a fund raising programme of $5 billion that included a follow-on public offering in the domestic market and an overseas issue. The Central Bank of India will also raise Rs 680-816 crore through an initial public offering, while UTI Bank is raising over $1 billion. The State Bank of India is likely to come out with a follow-on public offer later this year. Other nationalised banks are looking at different options, including hybrid capital, to raise funds.

In its filing with the US Securities and Exchange Commission, HDFC Bank said the net proceeds from the offering would be used to fund future growth. “By strengthening our capital base, the net proceeds will increase our ability to give loans and make investments and provide other financing products to our customers. In the short term, the net proceeds will reduce our use of overnight call borrowings as a funding source,” it said.

HDFC Bank also said its capital expenditure related largely to branch network expansion and investments in technology and communications infrastructure.