HDFC Bank Ltd is planning to launch Rs 10,000-crore initial public offering (IPO) of its non-banking finance unit (NBFC), HDB Financial Services, before 31 March 2020, according to media reports.
Bloomberg reported on Wednesday that HDFC Bank had already appointed Bank of America Merrill Lynch and Morgan Stanley to manage HDB Financial’s IPO. The bank may also hire more firms for the sale later, the report added.
HDFC Bank held 95.53% stake in HDB Financial Services as of 31 March, with the rest being held by individual shareholders and employee trusts. The share sale will help HDFC Bank raise funds to expand lending as many NBFCs grapple with a liquidity crunch in the country.
HDB Financial Services offers various products such as personal loans, commercial vehicle loans, gold loans and loans against property. Despite the recent NBFC crisis, the credit profile of HDB has remained largely unscathed. The company reported a profit of Rs 1,150 crore in the year ended March on a total income of Rs 8,700 crore, according to data on the lender’s website.
“HDB financial will get high valuation at listing and investors will lap it up on account of its strong capitalization, growing retail loan book and the parentage of HDFC Bank,” Siddharth Purohit, a banking analyst at SMC Global Securities, told Bloomberg. “The listing will give a valuation boost to HDFC Bank, too.”
If the IPO goes through, HDB Financial will become the fifth HDFC group firm to be listed on stock exchanges, after HDFC Asset Management Co. Ltd, HDFC Life Insurance Co. Ltd, Housing Development Finance Corp. Ltd and the HDFC Bank.
HDFC Bank shares closed 1.5% higher at Rs 2,465 on the National Stock Exchange of India (NSE) on Wednesday.
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