HDFC Bank Greenlights ₹12,500-Cr IPO for HDB Financial: India’s Biggest NBFC Public Offering

HDFC Bank has announced that its board has approved an Initial Public Offering (IPO) for its non-banking financial company (NBFC) subsidiary, HDB Financial Services (HDBFS), worth ₹12,500 crore. This IPO will be one of the biggest in India’s NBFC sector. As part of this offering, HDFC Bank plans to sell about ₹10,000 crore worth of its stake in HDBFS. In addition, HDBFS will issue fresh equity shares valued at ₹2,500 crore, bringing the total size of the IPO to ₹12,500 crore.

HDFC Bank currently holds a 94.5% stake in HDBFS. The IPO will mark the first public listing for the HDFC Group in six years, subject to market conditions, regulatory approvals, and other factors. Specific details, such as the IPO price and timeline, will be determined later. This IPO follows the Reserve Bank of India’s (RBI) requirement that large NBFCs, referred to as “upper-layer NBFCs,” must be listed on the stock market by September 2025.

HDB Financial Services is a major player in the financial services sector, lending mainly to individuals and small businesses. Its services include secured and unsecured lending, consumer loans, and loans against property. The proceeds from the IPO will likely be used to grow its lending business and improve its digital infrastructure.

In its latest financial results for the quarter ending September 2024, HDBFS reported a slight decline in net profit, falling 2% to ₹590 crore from ₹600 crore in the same quarter the previous year. As of September 30, 2024, the company’s total loan book stood at ₹98,600 crore, with stage three distressed loans accounting for 2.10% of gross loans. The capital adequacy ratio of HDBFS is at 19.3%, which reflects the company’s capacity to manage its current liabilities and continue expanding.

The IPO will provide HDFC Bank with an opportunity to unlock value from its NBFC subsidiary, while HDBFS will gain access to funds needed to expand its operations, particularly its lending portfolio and digital capabilities. The timing and details of the IPO are expected to be clarified soon, making it a significant event in India’s financial markets.