HDFC Bank Ltd is advancing with its strategic move to take its non-banking subsidiary, HDB Financial Services, public. The initial public offering (IPO) is expected to take place either by December this year or by the close of the current financial year, according to individuals familiar with the matter. The offering is likely to include both a secondary sale of shares and fresh capital infusion, aiming for a valuation in the range of $7–8 billion.

Bankers Being Shortlisted

HDFC Bank, which currently holds a 94.64% stake in HDB Financial Services, is in the final stages of selecting investment bankers for managing the IPO. The bank is expected to finalise the names this month. International firms such as Morgan Stanley, Bank of America, Nomura, and UBS Securities are among those being considered, while domestic players like ICICI Securities, Axis Capital, and IIFL are also likely to be involved in the process.

Fast-Track Regulatory Filings

Once the bankers are appointed, HDFC Bank plans to file the draft red herring prospectus (DRHP) within a month. Sources suggest that the process is being fast-tracked, and as soon as regulatory approval is secured, the company will proceed to list. HDFC Bank and HDB Financial Services have not provided any official comment on the matter as of now.

Unlocking Value and Valuation Goals

With a net worth of around Rs 13,300 crore as of the June quarter, HDFC Bank is targeting a valuation of Rs 78,000–87,000 crore (around $9–10 billion) for HDB Financial Services, translating to a price-to-book ratio of 4.5–5x. The bank is expected to sell off 10–15% of its stake in the IPO, potentially enhancing its capital adequacy by Rs 7,800–8,700 crore. HDFC Bank's capital adequacy ratio stood at 19.3% as of the June quarter.

No Pre-IPO Sale After Failed Talks

Initially, HDFC Bank explored the option of selling a portion of HDB Financial Services shares through private placement before the IPO. However, after talks with Mitsubishi UFJ Financial Group (MUFG) fell through, the focus shifted entirely to the public listing. With the IPO timeline now expedited, the bank aims to move forward quickly to ensure maximum value discovery without any delays.