HDFC Bank has taken a significant step towards the public listing of its subsidiary, HDB Financial Services, with the board's approval of a Rs 12,500 crore initial public offering (IPO). The decision came during a board meeting on October 19, 2024. The move follows earlier announcements made by the bank in July and September of this year, outlining the intention to list the non-banking financial company (NBFC).

IPO Structure and Breakdown  

The IPO will be structured to include both a fresh issue and an offer for sale (OFS). The fresh issue is expected to raise Rs 2,500 crore, while the OFS will see shares with a face value of Rs 10 being offered, contributing up to Rs 10,000 crore to the total size. The final amount under the OFS may be subject to revision as per regulatory guidelines. In total, the offering will raise Rs 12,500 crore, marking it as the largest IPO ever by an NBFC in India.

Comparison with Recent NBFC IPOs  

This IPO stands out in the NBFC sector. Just last month, Bajaj Housing Finance launched an IPO raising Rs 6,560 crore. HDB Financial's offering, at nearly double the size, will set a new benchmark for such entities going public in India.

Regulatory and Market Considerations  

While the bank has laid out the structure and size of the IPO, the offering is still subject to market conditions, regulatory approvals, and other procedural requirements. HDB Financial must also comply with the Reserve Bank of India's (RBI) scale-based regulations for NBFCs, which mandate the company to go public by September 2025. This regulation is crucial in determining the timeline for the IPO’s execution.

HDB to Remain HDFC Bank Subsidiary  

Despite going public, HDB Financial Services will continue to operate under the umbrella of HDFC Bank as a subsidiary, ensuring alignment with regulatory standards. HDFC Bank has reassured investors and stakeholders that the listing will not alter HDB’s subsidiary status, which will remain intact post-IPO.