The Bank of Tokyo-Mitsubishi UFJ (MUFG) is getting ready to acquire a 20 per cent stake in HDB Financial Services, a non-banking subsidiary of HDFC Bank, at a valuation of $9-10 billion, according to a report by the Economic Times. The deal is expected to be finalised at the HDFC Bank board meeting next week.
The transaction will be one of the largest deals in the shadow banking sector in India. HDFC Bank, the country’s largest private lender, currently owns around 95 per cent of HDB Financial Services, with the remaining 5 per cent held by employees under an Employee Stock Ownership Plan (ESOP), as per the ET report.
Livemint could not independently verify this news development.
The acquisition will be executed at a valuation of around five times the book value of HDB Financial Services. HDB Financial Services is expected to fetch a valuation in the range of USD 9 billion to USD 12 billion ( ₹75,000 crore to ₹1 lakh crore) during its upcoming initial public offering (IPO), subject to prevailing market conditions, as per the report.
HDB Financial Services is required to go public before September 2025 to comply with the Reserve Bank of India regulations. As of March 31, 2023, the company operates a vast network of 1,492 branches across India and is poised to become one of the largest listed finance companies in terms of market capitalisation, as reported by Mint earlier this year.
Also Read | HDB Financial IPO in the works as HDFC sets stage to list NBFC arm
In January 2024, HDFC Bank’s Chief Financial Officer Srinivasan Vaidyanathan stated that the bank has until September 2025 to list HDB Financial Services. He further noted that the preparatory work for the IPO would commence shortly.
For the financial year ended March 31, 2023, HDB Financial Services reported total revenue from operations amounting to ₹12,403 crore, along with a profit after tax of ₹1,959 crore. The company primarily focuses on providing vehicle loans, loans against property, and personal loans to its customers.
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Published: 12 Apr 2024, 02:41 PM IST