HDFC Bank’s board, on Saturday, approved an Offer for Sale of equity worth up to Rs 10,000 crore in HDB Financial Services as part of the subsidiary’s initial public offering (IPO). The total IPO size will amount to Rs 12,500 crore, which includes a fresh issue of Rs 2,500 crore.
“The price and other details of the proposed IPO will be determined in due course by the competent body,” said the bank in a regulatory filing to the exchanges.
After the proposed IPO, HDB Financial Services will continue to be a subsidiary of the bank, in compliance with the provisions of the applicable regulations, it added.
HDB Financial Services is coming with an IPO to comply with the Reserve Bank of India’s mandate in October 2022, requiring NBFCs in the upper layer to list on the stock exchanges. As of September 2023, the RBI classified 15 non-banking financial companies (NBFCs) as ‘upper layer’ and under the new regulation, unlisted companies in this category must go public within three years. Other unlisted lenders in the list include Tata Capital Financial Services and Piramal Capital & Housing Finance.
HDFC Bank holds a 94.64% stake in HDB Financial Services, a non-banking financial company (NBFC) arm of the bank. In FY23, the company’s loan book expanded by 17% year-on-year, reaching Rs 66,000 crore, driven by robust demand for personal, vehicle, and small business loans. HDB Financial Services serves the retail and commercial segments, offering a range of products such as personal loans, vehicle loans, and loans against property.