HDB Financial Services files draft papers for Rs 12,500 crore IPO

The lender plans to use the proceeds from the IPO to enhance its Tier-I capital base and meet future capital requirements, including those for onward lending

HDB Financial Services, the non-banking finance arm of HDFC Bank, has filed a draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (Sebi) for an initial public offering (IPO) of Rs 12,500 crore. Of this amount, HDFC Bank is selling shares worth Rs 10,000 crore through an offer for sale (OFS), while the remaining Rs 2,500 crore will be raised through a fresh issue by the lender.

 

The lender plans to use the proceeds from the IPO to enhance its Tier-I capital base and to address future capital needs, including those for onward lending.

 

HDFC Bank, India's largest private sector lender, holds a 94.36 per cent stake in HDB Financial Services. Established in 2007, HDB Financial Services is an upper-layer non-deposit-taking non-banking financial company (NBFC) that offers both secured and unsecured loans. As of September 30, HDB’s loan portfolio comprised just over 71 per cent in secured loans, with the remainder being unsecured.

 

Earlier this month, HDFC Bank had announced that its board had approved to sell equity shares worth Rs 10,000 crore via an OFS in its subsidiary HDB Financial Services. 

 

Reserve Bank of India (RBI) guidelines require HDB Financial Services to be listed by September 2025. The process of listing was kicked off between July and August by HDFC Bank.

 

For the quarter ended September 30, 2024 (Q2FY25), HDB Financial Services reported net revenue of Rs 2,410 crore and a net profit of Rs 590 crore. The loan book totalled Rs 98,600 crore, with Stage-3 loans accounting for 2.10 per cent of gross loans. The total capital adequacy ratio (CAR) stood at 19.3 per cent, with a Tier-I CAR of 14.6 per cent.

 

JM Financial, BNP Paribas, BofA Securities India, Goldman Sachs (India) Securities, HSBC Securities and Capital Markets (India), IIFL Securities, Jefferies India Pvt. Ltd, Morgan Stanley India, Motilal Oswal Investment Advisors, Nomura Financial Advisory and Securities (India), Nuvama Wealth Management, and UBS Securities India are the lead book managers for the IPO.

 

The lender has stated in its DRHP that it would consider a pre-IPO placement after consulting the lead managers.

 

The pricing and other details of the IPO will be determined in due course. The IPO is likely to be the biggest-ever by an NBFC.

 

After the IPO is completed, HDB Financial Services will continue to be a subsidiary of HDFC Bank.