HDFC planning IPO of mutual fund unit next year, says Deepak Parekh

Mumbai: Housing Development Finance Corp. Ltd (HDFC) is looking to list its mutual fund unit in 2018 and is also evaluating a plan to start a distressed asset fund, chairman Deepak Parekh said.

The mortgage lender is set to list its life insurance unit, HDFC Standard Life Insurance Co. Ltd, with an initial public offering (IPO) opening on 7 November.

“We are listing it (the asset management business) in the first quarter,” Parekh said in an interview on Saturday. HDFC Asset Management Co. Ltd managed average assets of Rs2.69 trillion in the quarter ended September. It could potentially become the second asset management company to list in India after Reliance Nippon Asset Management Co. Ltd, whose IPO saw was subscribed 81.45 times when it closed on Friday. 

Parekh said that the group was currently looking to monetize only the life insurance and mutual fund businesses. 

“Non-life is still small. It has to grow for a couple of years. We have a very small (education loan company) Credilla, which has been offered massive valuation from private equity firms. But we need to grow that company. That can be three-five years later,” he said. 

HDFC is also evaluating proposals to launch a distressed asset fund focused on real estate, Parekh said, adding that the mortgage lender was looking for some support from the National Housing Bank (NHB), its regulator. 

“We have had some internal discussions and with regulators around a real estate distressed asset fund. There are many projects which are half complete, (where) public money is involved, builder has run away or is in jail,” said Parekh. “We have talked to National Housing Bank. We would like NHB to take some initiative where we all contribute. It should have some legality to work.” 

Parekh also said HDFC was interested in the health insurance business, but indicated that the group would be happier acquiring a stake in some firm rather than building a new unit from scratch. 

“Health insurance is a good business. Star Health is selling. We have also received some message from Kotak,” said Parekh. “A standalone health company should be a part of the insurance company. We don’t want to create a new insurance company.”