HDFC Bank gears up to list NBFC arm HDB Financial

HDFC Bank gears up to list NBFC arm HDB Financial

HDFC Bank has set the ball rolling for the much-anticipated initial public offering of its subsidiary HDB Financial Services. The country’s largest lender by market capitalisation intends to schedule the launch of the share sale in its financial services arm in the last quarter of calendar 2024 or the first quarter of 2025, said sources familiar with the development.

If the IPO happens in 2024, it could be one of the biggest public issues of the year and the first from the HDFC Group after the merger of HDFC Bank and HDFC.

HDFC Bank has invited leading investment banks to submit bids and valuation estimates for the proposed IPO, said people with knowledge of the matter.

HDB Financial, a non-deposit-taking lender, is likely to be valued in the range of $9 billion to $12 billion (₹75,000 crore-₹1 lakh crore) for the IPO, depending on market conditions, said an investment banker aware of the discussions.

The private bank, which owns nearly 95% of HDB, may sell a 10% stake in the IPO, said the banker. At that level, the issue size could range from ₹7,500 crore to ₹10,000 crore. HDFC Bank could also consider a pre-IPO share placement with investors.

An email query to HDFC Bank was unanswered until press time.

Currently, the firm is valued at roughly $7.9 billion (₹65,690 crore), based on its price of ₹830 in the unlisted market.

Investors in HDB’s unlisted shares have been awaiting the company’s listing for the past three years. The bank needs to complete HDB’s IPO as the company has to be listed before September 2025 to comply with Reserve Bank of India norms. The RBI had in September 2023 mandated that non-banking finance companies (NBFCs) classified as part of the ‘upper layer’ have to be listed within two years.

After listing, the firm with 1,492 branches across the country will be one of the biggest listed finance companies in market capitalisation. The company’s total revenue from operations stood at ₹12,403 crore as of March 31, 2023, as against ₹11,306 crore in the previous year. It posted a profit after tax of ₹1,959 crore compared with ₹1,011 crore a year before. The company’s loan book primarily consists of vehicle loans, loans against property and personal loans.

Bajaj Finance, with a market capitalisation of ₹3.96 lakh crore, is the country’s largest NBFC in market value. The company’s revenues stood at ₹35,681 crore and net profit at ₹10,290 crore as of March 31, 2023.

HDB’s IPO will be the first issue by the combined entity of HDFC and HDFC Bank. Before the merger, HDFC Asset Management Company and HDFC Life, belonging to the erstwhile HDFC Ltd, were the last subsidiaries to be listed.

Brokers said expectations of a robust listing are high from HDB Financial because of its profitability track record and strong parentage. Most HDFC Group subsidiaries have made strong stock market debuts in the past. In the unlisted market, HDB shares have gained over 30% in the past three months with the listing buzz getting strong.

No Comments

Give a comment