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HDB Financial Services (HDBFS) Ltd, a subsidiary of India's leading private sector lender, HDFC Bank, is gearing up to raise a significant ₹12,500 crore through an initial public offering (IPO). The announcement was made by HDFC Bank's board in an exchange filing on October 19, 2024, outlining the company's plans for the public offering.
The IPO will see HDFC Bank, which currently holds a 94.6% stake in HDBFS, divesting ₹10,000 crore worth of shares through an offer-for-sale (OFS). The remaining ₹2,500 crore will be raised through a fresh issuance of shares, with each share carrying a face value of ₹10.
This move by HDBFS comes in response to a directive from the Reserve Bank of India (RBI), which mandates that 'upper layer' non-banking financial companies (NBFCs) must go public and get listed on stock exchanges. This regulation aims to enhance transparency and accountability within the NBFC sector, thereby fostering greater investor confidence.
HDB Financial Services, incorporated in 2007, has established itself as a prominent NBFC, offering a comprehensive suite of lending and business process outsourcing (BPO) services to individuals and businesses across India. Their lending services encompass both secured and unsecured loans, while their BPO portfolio includes back-office services like forms processing, document verification, financial and accounting services, and correspondence management, alongside front-office services such as contact center management, outbound marketing, and collection services.
The company's robust financial performance is reflected in its credit ratings. HDBFS boasts CARE AAA and CRISIL AAA ratings for its long-term debt and bank facilities, and an A1+ rating for its short-term debt and commercial papers. This strong credit profile underscores the company's financial stability and its ability to meet its obligations.
The IPO is expected to further strengthen HDBFS's financial position, enabling it to expand its operations and reach a wider clientele. The offering is likely to attract significant investor interest, given the company's track record, its strong credit ratings, and the growing demand for financial services in India's rapidly developing economy.