HDFC i-bank breaks even, eyes PE deals

The investment banking division of HDFC Bank has reached the breakeven point within a year of starting operations. The division sees opportunities in project finance as well as debt and private equity syndication, according to a senior executive.

The bank plans to double the size of its investment banking team to 25 over the next year, according to NS Kishore Kumar, country head, investment banking. “We have a strong corporate banking franchise that we will look to leverage. We want to position ourselves as a specialist in project finance and infrastructure,” he added.

The bank did rupee and foreign debt syndications as well as sell-downs aggregating to Rs 3,600 crore last year and is looking at Rs 10,000 crore worth of debt syndications next year.

HDFC Bank does not have a large project finance book and is looking to grow this business. “We used to play at the short end of the spectrum. Now, we are looking to lend long-term for good projects,” said Kumar. This move marks a change in strategy for the bank, which is known to be a conservative lender averse to long-term exposures. “We recognise that we cannot be in this business without taking more exposures,” Kumar said.

Other large private sector lenders are also focusing more on project finance. The country’s largest private sector lender, ICICI Bank, already has a strong presence in this space due to its development finance institution legacy. Axis Bank, which has a large infrastructure book, recently set up a 50-strong infrastructure group.

“The infrastructure space will need Rs 200,000 crore debt in the next three years and so we see huge potential in this area,” Kumar said.