HDB Financial announces price band for its ₹12,500cr IPO
What's the story
HDB Financial Services, a subsidiary of HDFC Bank, has announced the price band for its upcoming initial public offering (IPO).
The company has fixed the price band at ₹700-740 per share. The IPO aims to raise ₹12,500 crore and will open for subscription from June 25 to June 27.
The bidding for anchor investors will take place on June 24.
Fund allocation
Fresh issue to bolster capital base
The IPO comprises a fresh issue of equity shares worth ₹2,500 crore and an Offer For Sale (OFS) of ₹10,000 crore by HDFC Bank.
The funds raised from the fresh issue will be used to bolster HDB Financial Services's Tier-I capital base.
This move is aimed at meeting future capital requirements for additional lending and supporting business growth.
Regulatory compliance
RBI's mandate and HDFC Bank's board approval
The decision to list HDB Financial Services comes in compliance with the Reserve Bank of India (RBI)'s October 2022 mandate.
The guideline requires upper-layer non-banking financial companies (NBFCs) to be listed on stock exchanges within three years.
Last year, HDFC Bank's board had approved a ₹12,500 crore share sale, including a ₹10,000 crore OFS related to HDB Financial Services.
Market positioning
HDB will continue to be a subsidiary of HDFC Bank
After the proposed IPO, HDB Financial Services will continue to be a subsidiary of HDFC Bank.
Half of the issue size is reserved for qualified institutional buyers, 35% for retail investors, and the remaining 15% for non-institutional investors.
Investors can bid for a minimum of 20 shares and in multiples thereof.
A dozen book-running lead managers are overseeing this IPO process.