MUMBAI: The country’s largest private-sector lender HDFC Bank has approved a bumper Rs 12,500 crore initial share sale in its non-banking arm HDB Financial Services under which the promoter will be selling shares worth Rs 10,000 crore via offer for sale and the rest will be fresh issue.
Once completed, this will be the largest share sale by a non-bank lender. The current record is with the recent Rs 6,560-crore issue by Bajaj Housing Finance, which had a stellar debut with the shares gaining over 136 percent on the listing day in August.
"The board of directors of HDFC Bank approved an OFS of such number of equity shares of face value of Rs 10 each of HDB Financial aggregating up to Rs 10,000 crore, subject to applicable laws, market conditions, necessary approvals, and regulatory clearances," the filing had stated.
HDB Financial plans to raise as much as Rs 12,500 crore through the much-anticipated initial public offering (IPO). HDFC Bank holds a 94.6 percent in HDB Financial.
The IPO will be a combination of a fresh issue worth Rs 2,500 crore and an OFS worth Rs 10,000 crore, according to a late Saturday exchange filing.
The IPO is part of the conditions that the RBI had mandated while clearing the bank’s merger with its parent HDFC which came into effect in July 2023. The issue also assumes significance as the RBI had floated a draft regulation wherein it does not want a banking entity to have a subsidiary that also does regular credit services. The final regulation will be out after November 20 by when the regulator had asked banks to come back with their views on the proposed regulation.
This IPO is significant for HDFC Bank, marking the first public float by the banking group in six years. Last month, the bank had approved raising Rs 2,500 crore through the sale of shares, with the IPO being part of that strategy.
Listing HDB Financial not only fulfills regulatory obligations but also boosts the visibility of the NBFC in the capital markets.
The IPO also aligns with the Reserve Bank guidelines that mandate large NBFCs, classified as upper layer, must be listed by September 2025. These rules, introduced in October 2022, have spurred several NBFCs to consider public listings.
Founded in 2007, HDB Financial Services has rapidly grown into a leading NBFC, offering a diverse range of financial services such as secured and unsecured loans. It operates through more than 1,680 branches. As of June 2024, it had a net worth of Rs 13,300 crore.