HDB Financial Services Ltd, a non-banking subsidiary of HDFC Bank, has approved plans for an initial public offering (IPO) that will include a fresh equity issue worth Rs 2,500 crore and an offer for sale by existing shareholders, reported Bloomberg.
The IPO, which has been anticipated for months, and is likely to hit the market by December or by the end of the financial year, Moneycontrol reported earlier in September citing unidentified sources.
HDFC Bank, which holds a 94.64 percent stake in HDB Financial Services, has been in the process of shortlisting bankers for the issue. Foreign banks such as Morgan Stanley, Bank of America, and Nomura have been shortlisted, alongside domestic firms like ICICI Securities, Axis Capital, and IIFL, Moneycontrol said in another report in September.
HDFC Bank is seeking a valuation of Rs 78,000-87,000 crore for HDB Finance, translating to an estimated price-to-book value of 4.5 to 5 times. This IPO could see the bank offloading 10-15 percent of its stake, potentially raising Rs 7,800-8,700 crore, bolstering its capital adequacy. As of June 2024, HDFC Bank’s capital adequacy ratio stood at 19.3 percent.
The decision to list HDB Financial Services follows the Reserve Bank of India’s mandate in October 2022, requiring non-banking financial companies (NBFCs) in the “upper layer” to list on the stock exchanges. The IPO approval also comes shortly after the bumper listing of Bajaj Housing Finance, which saw its market cap cross Rs 1.4 lakh crore this week.