HDB Financial Services, the non-banking finance arm of HDFC Bank, is in talks with Bank of America Securities, Morgan Stanley and Nomura to shortlist advisors to a proposed initial public offering (IPO), said people aware of the development. More banks may come on board. The talks are preliminary, and a final decision is expected in the next few weeks, said the people.
HDFC Bank could dilute nearly 10% to raise around ₹10,000 crore ($1.2 billion).
“The NBFC (non-banking finance company) is in the final stage of appointing lead managers to the IPO after it received a nod from HDFC Bank last month to start the listing process,” one of the persons cited earlier said. “It feels the markets are buoyant and this is the right time for the IPO.” HDB stocks are currently fetching ₹1,130-1,140 apiece in the grey market, which would value the NBFC at about ₹90,000 crore ($10.7 billion).
HDB, HDFC Bank, Morgan Stanley and Nomura did not immediately respond to an email seeking comments.
Bank of America Securities declined to comment.
On July 20, the board of HDFC Bank gave in-principle approval to initiate the process of listing HDB Financial Services. The board has authorised a committee of directors to oversee the process.
The listing is to comply with requirements of the Reserve Bank of India (RBI). HDB is in the upper layer of NBFCs, the highest category, which means it needs to be listed by September 2025 under regulatory guidelines.
NBFCs are categorised by their size and systemic importance. Those in the top or upper, layer will have the maximum level of scrutiny.
In June, HDB told ET it was prepared for an IPO. “We are ready. It’s just (a question of) when we will be asked to, (when) the parent decides something… this is one of those,” Rohit Patwardhan, chief credit officer, HDB Financial Services, had said. “From a readiness standpoint, since we are debt-listed, we are there as far as compliance, documentation and reporting are concerned.”
At the end of March, HDFC Bank held 94.6% in HDB Financial Services.
The NBFC’s June quarter revenue rose 3.2% to ₹2,390 crore from the year earlier. Profit after tax rose 2.6% to ₹580 crore. The total loan book was Rs 95,600 crore at the end of June, versus ₹73,600 crore a year earlier. Stage 3 loans were at 1.93% of gross loans. Total capital adequacy ratio (CAR) was at 18.8%, with tier 1 CAR at 14%.
HDB primarily focuses on vehicle and personal loans, as well as loans against property. The NBFC also has plans to open nearly 200 new branches this fiscal year, to add to the 1,600 it has, to expand its loan book.
