Japan's MUFG may cut $2b cheque for 20% in HDB Financial Services
Mitsubishi UFJ Financial Group Inc (MUFG), the world's second-largest bank holding company, is in advanced negotiations to buy a 20% stake in HDB Financial Services (HDB), a non-banking subsidiary of HDFC Bank, at a $9-10 billion valuation, said people aware of the matter.
Once finalised, the $2 billion investment will be among the largest financial services sector deals involving lenders of the two countries.
It will also unlock value for parent HDFC Bank, India's largest bank by market capitalisation, which has been dealing with synergy issues following the $60 billion merger with housing loan parent company HDFC Ltd.
The final decision on the proposed investment is likely to take place next week during HDFC Bank's board meeting.
The lending unit, which has been categorised as one of the 16 «upper-layer» non-banking finance companies (NBFCs) by the central bank that are subject to greater regulatory scrutiny, has also been preparing for a much-anticipated initial public offering (IPO). This is set for the last quarter of calendar 2024 or the first quarter of 2025 and will make it the first subsidiary to be listed after the merger. This is in line with Reserve Bank of India (RBI) regulations that require it to list before September 2025. Before the merger, HDFC Asset Management Co. and HDFC Life, belonging to the erstwhile HDFC Ltd, were the last subsidiaries to be listed. On January 17, HDFC Bank's CFO Srinivasan Vaidyanathan had said preparatory work on the IPO would begin shortly.
The MUFG transaction will
