HDB Financial Services files draft papers with Sebi for Rs 12,500 crore IPO

HDB Financial Services, a subsidiary of HDFC Bank, has filed preliminary papers with capital markets regulator Sebi to raise Rs 12,500 crore through an initial public offering (IPO).

The proposed IPO is a combination of a fresh issue of equity shares worth Rs 2,500 crore and an Offer-for-Sale (OFS) of Rs 10,000 crore by promoter HDFC Bank, according to the draft red herring prospectus (DRHP) filed on Wednesday.

At present, HDFC Bank holds 94.36 per cent stake in HDB Financial Services, a non-banking financial company (NBFC) arm of the bank.

The company proposes to utilize the proceeds from the fresh issue to strengthen its Tier-I capital base. This will support future capital needs, including additional lending, to support business growth.

The decision to list HDB Financial Services follows the Reserve Bank of India's mandate in October 2022, requiring NBFCs in the upper layer to list on the stock exchanges within three years.

Earlier this month, HDFC Bank's board approved a share sale worth Rs 12,500 crore comprising Rs 10,000 crore offer for sale (OFS) related to its subsidiary HDB Financial Services.

After the proposed IPO, HDB Financial Services will continue to be a subsidiary of the bank, in compliance with the provisions of the applicable regulations, it added.

HDB Financial Services closed the June quarter with a net worth of about Rs 13,300 crore.

A dozen book-running lead managers -- JM Financial, BNP Paribas, BofA Securities India, Goldman Sachs (India) Securities, HSBC Securities and Capital Markets (India) Pvt Ltd, IIFL Securities, Jefferies India, Morgan Stanley India Company, Motilal Oswal Investment Advisors, Nomura Financial Advisory and Securities (India) Pvt Ltd, Nuvama Wealth Management, and UBS Securities India -- will manage the company's IPO.