HDB Financial IPO: HDFC Bank clears subsidiary’s IPO plan to raise ₹2,500 crore via fresh issue plus OFS

HDB Financial Services, a subsidiary of India's biggest private lender, HDFC Bank, received the board's nod for an initial public offering (IPO) of equity shares on Friday. The IPO will comprise a fresh issue of shares worth ₹2,500 crore and an offer for sale (OFS) by existing shareholders, HDFC Bank informed in an exchange filing.

HDFC Bank said the OFS of equity shares will be done by existing and eligible company shareholders who may offer to tender their equity shares. This will be subject to the shareholders' approval, market conditions, receipt of applicable approvals, and other regulatory clearances and considerations.

The board of directors also approved the amendments to the company's articles of association, the Employee Stock Option Scheme 2014, the Employee Stock Option Scheme 2017, and the Employee Stock Option Scheme 2022, to comply with regulatory requirements. Currently, HDFC Bank owns a 94.6 per cent stake in its non-banking financial subsidiary.
 

HDB Financial IPO details

The IPO marks the HDFC group's first public float in six years. On July 20, HDFC Bank announced that the board provided an in-principle approval to start the HDB Financial Services listing process. That came after the Reserve Bank of India (RBI) mandated non-banking financial companies (NBFCs) in the “upper layer” of the system to list themselves publicly in the exchanges. The RBI issued the directive in October 2022.

Recently, HDFC Bank rejected a proposal by Mitsubishi UFJ Financial Group (MUFG), a Japanese lender, to purchase a stake in HDB Financial Services, Mint reported on September 4. MUFG reportedly wanted to buy a 20 per cent stake in HDB Financial Services.

In Q1 FY25, HDFC Bank reported a two-per cent decline in its net profit to ₹16,175 crore from ₹16,511.9 crore in the same quarter the previous year. The net interest income (NII), which is the difference between interest earned and interest paid, went up by 2.6 per cent from the previous quarter to ₹29,837 crore from ₹29,078 crore in Q4 FY24.