Indian non-bank lender HDB Financial files for $1.5 bln IPO

Oct 31 (Reuters) – HDB Financial Services, the non-banking lending unit of India’s biggest private lender, HDFC Bank (HDBK.NS), has filed for an initial public offering of up to 125 billion rupees ($1.49 billion), in line with its parent’s announcement earlier this month.

HDFC Bank, which holds a 94.6% stake in the lender, will sell shares worth up to 100 billion rupees, while HDB Financial will issue fresh shares worth up to 25 billion rupees, according to draft papers filed late on Wednesday.

The offer price, price band, and minimum bid size will be set later in consultation with the lead book-running managers that include Jefferies, Goldman Sachs, and BofA Securities, the papers showed.

HDB said it will use its share of the IPO proceeds for capital requirements, including onwards lending and regulatory compliance.

Last month, HDFC Bank approved the unit’s IPO, marking the group’s first public float in six years as it aims to meet the financial regulator’s deadline that “upper layer” non-banking financial companies (NBFCs), based on their size, activity and perceived risk levels, be listed by September 2025.

Bajaj Housing Finance (BAJO.NS), went public in September to meet that requirement, in what was one of the best major listings in a red-hot Indian IPO market this year.

Incorporated in 2007, HDB provides secured and unsecured loans and has more than 1,680 branches across India. It provides consumer loans, business loans and micro loans, among others.

HDB’s gross loan book stood at 986.20 billion rupees as of Sept. 30, reflecting a growth of nearly 21% in two years.

The company generated a profit of 24.60 billion rupees in 2023-24, a nearly 56% jump between financial years 2022 and 2024.

However, its net interest margin (NIM), a key gauge of profitability, dropped to 7.85% in 2023-24, from 8.25% a year earlier.

HDB cautioned that its NIMs could decline if interest rates were volatile. ($1 = 84.0830 Indian rupees)