Mitsubishi UFJ Financial Group Inc (MUFG) is in advanced talks to inject up to $2 billion into HDB Financial Services Ltd, a subsidiary of HDFC Bank Ltd, potentially valuing it at $10 billion. The discussions coincide with HDB Financial Services' IPO preparations, as hinted by HDFC Bank's CFO earlier.

MUFG's interest signals its desire to expand in India's financial market, following a previous investment in DMI Finance Pvt Ltd. HDB Financial Services has seen robust growth, with its AUM reaching Rs 83,989 crore by December 2023, driven by diversified lending including commercial vehicle and construction equipment financing, property loans, and business loans.

The company's expansion into consumer durable financing, gold loans, and digital products has also been notable, increasing its AUM share from 3% in March 2019 to 8% by December 2023. Crisil's report underscores its strong credit profile, with a substantial profit increase from Rs 1,011 crore in fiscal 2022 to Rs 1,959 crore in fiscal 2023.

For the first nine months of fiscal 2024, HDB Financial Services reported a profit of Rs 1,805 crore. The potential investment from MUFG could fuel HDB Financial Services' growth trajectory, enhancing its position in India's financial sector.

With solid fundamentals and a strategic partnership looming, HDB Financial Services is poised for further expansion and success as it moves towards its IPO.