RBI circular overhang weighs on the HDB Financial Services valuation

IPO valuations likely to be $7.2 bn, down from $10 bn eyed earlier

HDFC Bank, India’s largest private-sector lender, has likely settled for up to 30 per cent lower valuation than estimated earlier for its non-banking financial services (NBFC) arm, HDB Financial Services, whose initial public offering (IPO) opens on June 25, investment banking sources said. 

The lender was initially eyeing a valuation of $10 billion (₹86,000 crore). However, it has agreed to sell the shares at $7.2 billion (₹62,000 crore). This is due to an overhang created by a draft Reserve Bank of India (RBI) circular requiring banks to reduce their stakes in NBFC arms engaged in similar activities to 20 per