India’s largest private sector bank HDFC Bank is gearing up for Initial Public Offering (IPO) of its subsidiary HDB Financial Services. According to the sources cited in the Economic Times, the bank has initiated plans to kickstart the share for its Non-banking financial arm, HDB Financial Services either in the last quarter of 2024 or the first quarter of 2025.
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Valuation of HDB Financial Services
The subsidiary is a non-deposit-taking NBFC which could potentially fetch a valuation of USD 9 Billion to USD 12 Billion during the IPO, contingent upon prevailing market conditions. The IPO is expected to be a significant event, potentially marking one of the most notable listings of the year and the first from the merged HDFC Bank and HDFC entity.
With 94.7%, HDFC Bank is the Majority Shareholder in HDB Financial Services, now the HDFC Bank is considering divesting 10% stake in the IPO, with a potential issue size ranging from INR 7,500-10,000 Cr. In addition to that the Bank is also exploring the option of a pre-IPO placement with the investment banks to solicit bids and valuation assessments for proposed IPO.
RBI’s Mandate
The NBFC is mandated by the RBI regulations to be listed on the Stock Exchange before September 2025. Financially, HDB Financial Services has showcased a strong performance, with total revenue from operations amounting to INR 12,403 Cr. and a profit after tax of INR 1,959 Cr. for the same period. The company primarily focuses on vehicle loans, loans against property (LAP), and personal loans.
Experts’ Anticipation
Market experts anticipate a robust listing for HDB Financial Services, citing the company’s track record of profitability and its robust parentage under HDFC Bank. This enthusiasm has already been reflected in HDB shares, which have surged over 30 % in the past three months in the unlisted market, bolstering expectations for a successful debut.
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In a statement to the press, HDFC Bank did not respond to queries regarding the IPO plans. However, on January 17, HDFC Bank’s CFO Srinivasan Vaidyanathan noted that the bank has time till September 2025 to list HDB Financial Services, indicating that preparatory work on the IPO would begin shortly.
Disclaimer:
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