HDFC Bank in Talks with Mitsubishi UFJ Financial Group for Stake Sale in HDB Financial Services
Restarted Talks
In a surprising move, HDFC Bank, India’s biggest private sector bank, has reopened discussions with Japan’s financial giant Mitsubishi UFJ Financial Group (MUFG) for a significant stake sale in its non-lending subsidiary, HDB Financials Services.
Reason for Restart
Sources familiar with the situation mentioned that the new rules proposed by the Reserve Bank of India on October 4 may have prompted HDFCBank to reconsider a potential stake sale before HDB Financial’s initial public offering (IPO).
Offer Details
HDFCBank has offered MUFG a 20 percent stake in HDB Financial and seems more willing to negotiate on deal valuations this time.
Current Status
According to one source, officials from HDFC Bank are once again in talks with MUFG’s senior management. However, it is still early to determine if an agreement will be reached.
Future Plans
The objective of restarting talks with MUFG is to ensure a smooth process for further stake dilution in the future, especially if the draft circular on business form and prudential regulations for investments becomes final.
Potential Benefits
If successful, this deal could help HDFC Bank reduce its stake in HDB Financial to around 61 percent. This could make it easier for the bank to bring in a large investor before HDB Financial’s IPO and divest stake if needed.
Conclusion
It is still too early to predict the outcome of the talks between HDFC Bank and MUFG. However, if the discussions are successful, it could have a significant impact on the future of HDB Financial Services. At 11.22 am, HDFC Bank’s share price was trading at Rs 1,861.35 on the National Stock Exchange (NSE), down 0.56 percent from the previous close.