MUMBAI: HDFC Bank's wholly owned subsidiary, HDB Financial Services, is racing to launch its much-anticipated ₹12,500-crore initial public offering (IPO) as early as next week, in what would be the biggest IPO by a non-banking lender. The float is expected to value the company at around ₹62,000 crore.
The company is set to file its final Red Herring Prospectus with SEBI later this week and open the issue next week, a person involved with one of the lead investment banks told TNIE on Tuesday.
Another source confirmed that HDB Financial is eyeing a post-money valuation of approximately ₹62,000 crore.
The IPO comprises a fresh issue of ₹2,500 crore and an offer for sale (OFS) of ₹10,000 crore by parent HDFC Bank, which currently holds a 94.3% stake. HDB had filed its draft papers on October 21, 2024. HDFC Bank’s board had given in-principle approval for the listing of the subsidiary in July last year.
The listing comes in the wake of an October 2022 RBI directive that mandates all "upper layer" NBFCs — such as HDB Financial — to list by September 2025.
The issue is being managed by a 12-bank syndicate, including JM Financial, BNP Paribas, BofA Securities, Jefferies, Goldman Sachs, HSBC Securities, Nomura, IIFL Securities, Morgan Stanley, Nuvama, Motilal Oswal, and UBS. Cyril Amarchand Mangaldas is the legal advisor.
Proceeds from the fresh issue will be used to strengthen the company’s core capital base.
Once completed, this will be the largest share sale by a non-bank lender. The current record is held by Bajaj Housing Finance, which raised ₹6,560 crore in its recent IPO and saw a stellar debut with a 136% gain on listing day in August 2024.
This IPO is also part of the regulatory conditions imposed by the RBI while approving HDFC Ltd’s merger with HDFC Bank, which took effect in July 2023. It comes at a time when the RBI has proposed draft regulations prohibiting banks from owning subsidiaries that directly offer credit services — a move that could reshape holding structures in the financial sector. Banks have until November 20, 2024, to submit feedback on the draft.
The IPO also marks the first public float by any HDFC Group entity in six years. Last month, HDFC Bank had approved raising ₹2,500 crore via share sales, of which the IPO is a part.
Founded in 2007, HDB Financial has grown rapidly into one of the leading NBFCs, offering a wide range of financial services including secured and unsecured loans. As of June 2024, it operated over 1,680 branches and had a net worth of ₹13,300 crore.