HDB Financial Services IPO: HDFC Bank Subsidiary Gets Sebi’s Nod For Rs 12,500 Crore Public Issue

HDB Financial Services IPO: The Securities and Exchange Board of India (Sebi) has approval to HDB Financial Services (HDBFS) to float its initial public offering (IPO). The HDFC Bank subsidiary aims to raise Rs 12,500 crore through the public issue. The parent company will pare its stake in HDB Financial Services during the public issue. Prior to the public issue, HDFC Bank held 94.36 per cent stake in the company.

HDB Financial Services IPO: Key Details

HDB Financial Services plans to raise Rs 12,500 crore through a book-building issue. The HDFC Bank subsidiary’s public issue will comprise a fresh issuance of shares worth Rs 2,500 crore and an offer-for-sale of Rs 10,000 crore, according to the company’s Draft Red Herring Prospectus (DRHP).

Notably the listing of the HDFC Bank subsidiary is being done to comply with a regulatory requirement. HDB Financial Services is classified within the “Upper Layer” category of non-banking financial companies (NBFCs) as per the Reserve Bank of India’s (RBI) October 2022 circular.

According to RBI’s rules, all NBFCs classified in the ‘upper layer’ category need to be listed within a period of three years of notification.

The price band, allotment date and other such key details of the public issue will be determined in due course. After the public issue, the company will continue to remain a subsidiary of HDFC Bank.

According to HDB Financial Services DRHP, the NBFC plans to use the money raised through the public issue for strengthening its Tier 1 capital, providing for future capital requirements, including onward lending, and complying with capital adequacy norms.

HDB Financial Services Key Details

HDB Financial Services was incorporated in 2007. It operates as a retail-focused NBFC and operates through three verticals namely, enterprise lending, asset finance, and consumer finance.

The NBFC is also engaged in providing business process outsourcing (BPO) services to HDFC Bank and other fee-based functions, such as distribution of insurance products. The company has a pan-India presence with 1,772 branches located in 1,162 towns and 31 states and Union Territories.