The issue will include a fresh issue of shares aggregating up to Rs 2,500 crores and an offer for sale (OFS) of Rs 10,000 crore by parent HDFC Bank, people familiar with the issue said.
HDB will use the fresh Rs 2500 crore towards augmenting the company’s Tier – I capital and to grow its main lending business.
HDB had to list its shares in the local market to meet regulatory requirements of the Reserve Bank of India (RBI) introduced in October 2022, which said that upper layer NBFCs have to be listed in the stock market by September 2025.
HDFC Bank owns close to 95% of its NBFC will dilute its stake and raise Rs 10,000 crore through the sale of shares. The rest of the shares are mostly owned by current and former employees.
Results released earlier this month showed that HDB’s net profit for the quarter ended September 2024 fell 2% to Rs 590 crore from Rs 600 crore a year ago.The total loan book of the non-deposit-taking NBFC was Rs 98,600 crore billion as on September 30, 2024, with stage three distressed loans at 2.10% of gross loans. Capital adequacy is at 19.3%.HDBFS lends mostly to individuals and small businesses specialising in secured and unsecured lending, consumer loans, and loan against property. The proceeds from the IPO are likely to be used for expanding its lending book and enhancing digital infrastructure.
HDB has three business verticals enterprise lending, asset finance and consumer finance. The company is one of India’s largest and fastest growing customer franchises, according to the Crisil and has served 17.5 million customers as af September 30, 2024, which grew at a CAGR of 28.22% between March 31, 2022 and September 30, 2024.
The public issuue will Include a reservation of shares for eligible employees and also HDFC Bank shareholders.
A pre IPO placement may also be done at a price to be decided by the company, in consultation with the managers to the issue. If the pre-IPO placement is completed, the amount raised pursuant to the pre-IPO placement will be reduced from the fresh issue.
A total of 12 banks have been appointed to manage the issue namely, BNP Paribas, HSBC Securities, BoFA Securities, JM Financial, Motilal Oswal, Goldman Sachs, IIFL Securities, Jefferies India, Morgan Stanley India, Nuvama Wealth and UBS Securities.