HDFC Bank, India’s leading private lender, is gearing up for the much-anticipated initial public offering (IPO) of its subsidiary, HDB Financial Services, according to a report from the Economic Times, citing insider sources.
HDB Financial, a non-deposit-taking lender, is expected to command a valuation between $9 billion to $12 billion (₹75,000 crore to ₹1 lakh crore) during its IPO, depending on market conditions.
With HDFC Bank holding a 94.7 percent stake in its subsidiary, it is considering divesting a 10 percent share during the IPO, potentially raising between ₹7,500 to ₹10,000 crore. Additionally, HDFC Bank is contemplating a pre-IPO share placement with investors.
To facilitate this process, HDFC Bank has reached out to prominent investment banks to solicit bids and valuations for the proposed IPO.
The bank aims to commence the share sale for its non-banking financial services arm either in the last quarter of 2024 or the first quarter of 2025. If it proceeds in 2024, it could mark one of the significant listings of the year and the first from the merged HDFC Bank and HDFC entity.
However, HDFC Bank did not respond to queries regarding these plans.
The IPO of HDB Financial assumes significance due to regulatory requirements set by the Reserve Bank of India, which mandates the company to list before September 2025. As of March 31, 2023, HDB operates 1,492 branches nationwide and stands as one of the largest listed finance companies in terms of market capitalization.
In terms of financial performance, HDB recorded total revenue from operations amounting to ₹12,403 crore, with a profit after tax of ₹1,959 crore for the same period. Its primary focus areas include vehicle loans, loans against property, and personal loans.
Brokers anticipate a strong debut for HDB Financial in the stock market, citing its track record of profitability and robust parentage. The enthusiasm surrounding the IPO has already been reflected in HDB shares, which surged over 30 percent in the past three months in the unlisted market, bolstering expectations for a successful listing.
