HDB Financial Services IPO news again is in headlines, roadshows are currently being conducted
HDB Financial Services IPO – International roadshows are currently in progress for the multi-billion initial public offering (IPO) of HDFC Bank’s non-banking arm, HDB Financial Services.
Senior officials from HDFC Bank and HDB Financial are engaging with prominent investors in the UK, the US, Singapore, and Hong Kong, as reported by Moneycontrol.
The roadshows commenced towards the end of December, with teams currently in discussions with various international investors, as mentioned by a reliable source.
Prominent foreign funds, including sovereign funds and pension funds, have been approached to gauge their interest in investing in a substantial issuance like HDB Financial. The valuation of HDB Financial is estimated to be between $10 billion and $12 billion, appAroximately Rs 85,000-1,00,000 crore.
A banker, speaking on the condition of anonymity due to lack of authorization to speak to the media, stated, “The final pricing of the issue will be determined by the response received from potential investors. It is premature to comment on the pricing at this stage.”
Currently, unlisted shares of HDB Financial are trading at Rs 1,225 each, reflecting a market capitalization of Rs 97,154 crore.
The roadshows are in full swing, and HDFC Bank intends to launch the IPO within two to three weeks of receiving final feedback from the Securities and Exchange Board of India. Another banker, who also preferred to remain anonymous, mentioned, “The goal is to conclude the IPO of HDB Financial by the end of this fiscal year.”
HDFC Bank submitted the draft red herring prospectus to Sebi on November 5. Moneycontrol had previously reported on September 4 about HDFC Bank’s intentions to list HDB Financial by March 2025.
According to the draft document, the Initial Public Offering (IPO) includes a Rs 10,000 crore offer for sale by the parent bank and a fresh issuance of Rs 2,500 crore. This represents a little over 10 percent stake held by the bank in its Non-Banking Financial Company (NBFC) arm. HDFC Bank currently holds a 94.36 percent stake in HDB Financial.
On December 16, Moneycontrol reported that HDFC Bank may be in discussions with Japan’s Mitsubishi UFJ Financial Group (MUFG) for a 20 percent stake sale in HDB Financial.
Sources indicate that due to regulatory requirements not being resolved despite the potential stake sale to the Japanese financial conglomerate, HDFC Bank has decided to proceed with the IPO.
“Furthermore, valuations have been a contentious issue, and it is believed that once the listing is completed, it will help clarify the asking price for the NBFC, facilitating a smoother secondary sale,” stated a banker familiar with the situation.
Regulatory Concerns
On October 8, the Reserve Bank of India issued a circular titled “Form of business and prudential regulations for investments,” which states that a bank and its subsidiaries cannot engage in similar lines of business. If they do, banks will be required to reduce their stake in the subsidiary within two years. However, several banks have requested a deferral of this requirement or more time for compliance.
In a report dated January 7, Macquarie highlighted that the draft RBI regulations regarding the overlap of similar businesses create uncertainty and could potentially impact the valuations of HDB Financial and HDFC Bank.
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Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.