ET Exclusive: Japan’s MUFG set to pick 20% stake in HDFC Bank arm HDB Financial for $2 bn
MUFG) is buying a 20% stake in HDB Financial Services, a non-banking subsidiary of HDFC Bank at a $9-10 billion valuation, ahead of its proposed IPO, said people aware. The final decision is likely to take place next week at the HDFC Bank board meeting, said people in the know. Once announced this will be among the largest deal in the shadow banking space in India.
HDFC Bank owns around 95% of the shadow bank and employees own 5% as ESOPs. The discussions have been ongoing for years but gathered momentum in the last few weeks.
The deal is being done at 5 times book value.
Mails sent to HDFC Bank and MUFG did not immediately generate a response.
A non-deposit-taking lender, HDB Financial could fetch a valuation in the range of $9 billion to $12 billion ( ₹75,000 crore to ₹1 lakh crore) during the IPO, contingent upon prevailing market conditions, ET reported recently.
HDB's IPO assumes significance as the company must list before September 2025 to adhere to Reserve Bank of India regulations. As of March 31, 2023, the firm operates 1,492 branches nationwide and stands as one of the largest listed finance companies in terms of market capitalisation.
On January 17, HDFC Bank’s CFO Srinivasan Vaidyanathan noted that the bank has time till September 2025 to list HDB Financial Services. He then said said preparatory work on the IPO would begin shortly.
Its total revenue from operations amounted to ₹12,403 crore, with a profit after tax of ₹1,959 crore for the same period. HDB primarily focuses on vehicle loans,
