Money & Banking

HDFC Bank picks up BofA, Morgan Stanley for HDB Financial IPO

Bloomberg Mumbai | Updated on June 26, 2019 Published on June 26, 2019

The bank plans to sell shares in HDB Financial Services in a deal that may raise about ₹10,000 crore


HDFC Bank , India’s biggest lender by market value, has picked Bank of America Corp. and Morgan Stanley to manage an initial public offering of its non-bank finance unit, people with knowledge of the matter said.

The bank plans to sell the shares in HDB Financial Services before March 31 in a deal that may raise about ₹10,000 crore ($1.4 billion), the people said, asking not to be identified as the information is not public. HDFC Bank may hire more firms for the sale later, the people said.

Selling shares in the unit will help the bank led by Managing Director Aditya Puri raise funds to expand lending as many non-bank financiers grapple with a liquidity crunch. The credit profile of HDB Financial has remained unscathed even as many other shadow lenders in the country were hit by rising borrowing costs after the nations credit market largely shunned them post a crisis at Infrastructure Leasing & Financial Services last year.

HDB financial will get high valuation at listing and investors will lap it up on account of its strong capitalisation, growing retail loan book and the parentage of HDFC Bank, said Siddharth Purohit, a banking analyst at SMC Global Securities. The listing will give a valuation boost to HDFC bank too.

Spokesmen for HDFC Bank and Bank of America didn’t immediately comment while a spokeswoman for Morgan Stanley declined to comment. HDFC Banks shares ended up 1.49 per cent to ₹2,465.

HDB Financial reported a profit of ₹1,150 crore in the year ended March 31 on a total income of ₹8,700 crore , data available on the lenders website shows.

Published on June 26, 2019
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