The country’s largest private sector bank, a subsidiary of HDFC, is gearing up for an IPO. After the market closed on Friday, the bank released a key update saying it is considering launching an initial public offering (IPO) and has now received board approval. The company will raise Rs 2,500 crore through the IPO.
HDB Financial Services, a subsidiary of the country’s largest private lender HDFC Bank, has approved raising Rs 2,500 crore by issuing new shares through an initial public offering (IPO), the lender provided in an exchange filing on Friday.
The shares will be sold through new issues and OFS.
The bank said, “We would like to inform you that the Board of Directors of the Company at its meeting held today, inter alia, considered and approved the Initial Public Offer of Equity Shares of par value Rs 10 each, subject to shareholders’ approval, including issue of new equity shares up to Rs 2,500 crore and Offer for Sale (OFS) by existing and eligible shareholders of the Company, whereby such shareholders may sell their equity share capital.”
The company will receive shareholder approval
After the approval of the board of directors, this IPO is still subject to the approval of the shareholders of the company. This IPO will be launched only after the market conditions, SEBI’s approval and clearance. This means that it may take some time for this IPO to be launched. After the approval of SEBI, the IPO of HDFC subsidiary will be listed in the market.
HDFC Bank holds so much stake in HDB
HDFC Bank holds 94.64% stake in HDB Financial Services. The process of shortlisting bankers for this issue is underway. Besides foreign banks like Morgan Stanley, Bank of America and Nomura Securities, domestic firms like ICICI Securities, Axis Capital and IIFL have also been shortlisted.
HDFC Bank is looking to value HDB Finance at Rs 78,000-87,000 crore. The bank could sell 10-15% stake in the IPO, which could raise Rs 78,000-87,000 crore, which would strengthen its capital adequacy ratio, which stood at 19.3% as of June 2024.
Decisions taken after RBI order
Let us tell you that the decision to list HDB Financial Services came after the Reserve Bank of India’s order in October 2022, which required some non-banking financial companies (NBFCs) to list on the stock exchanges. Bajaj Housing Finance received IPO approval soon after its listing.
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