HDB Financial Services launches ₹12,500 crore IPO as regulatory issues persist

HDB Financial Services on Friday (June 20, 2025) launched a ₹12,500-crore initial public offering (IPO), even as some regulatory issues surrounding the business persist.

The company has set a price band of ₹700-740 for the fund raise, which is reportedly at a 66 per cent discount to the price of the share in the grey market.

The IPO includes a ₹2,500-crore fresh capital raise and ₹10,000 crore offer for sale (OFS) from its parent HDFC Bank, which will lead to a 20 per cent reduction in the promoter shareholding in the entity to 75 per cent.

HDB Financial, which had over ₹1 lakh crore in assets under management as of March 2025, is required to list by September this year as part of a Reserve Bank of India (RBI) listing mandate for bigger NBFCs, but the central bank’s October 2025 proposal on forms of business will weigh on the investors.

As per the circular, a bank needs to ensure that none of its subsidiaries undertakes the same activities as it. If a bank wants to continue with such arrangements, its shareholding in the NBFC is capped at 20 per cent.

HDB Financial’s Non-Executive Chairman Arijit Basu said “there is nothing which is uncommon” between HDFC Bank and the IPO-bound company, and stressed that the RBI’s proposals have no bearing on HDB Financial as the onus is on the bank on whether it wants to continue with a business or not.

Ramesh G, the managing director and chief executive, said HDB Financial has built the business, including enterprise loans, consumer loans, and asset finance from ground-up since 2008 and stressed that it operates independently in such a way that no sourcing is done from the promoter and the technology stack is also different.

On the low valuations, a banker explained that typically, the grey or unlisted market’s expectations do not influence the pricing of an issue.

To a specific question on whether regulatory uncertainties had a bearing on the price band, another banker admitted that there were discussions and the price has been determined after extensive investor roadshows over the last few days.

The banker said mutual funds, insurance companies, and foreign institutional investors are keen to subscribe to the issue, and claimed that HDB Financial will have one of the best anchor investor allotments when the details are disclosed next Tuesday.

The public issue for shares of ₹10 face value — to be subscribed in multiples of 20 — will be open from June 25-27.

The company management said improving the asset quality will be among the top priorities for the management going forward.

The HDB Financial IPO is the second biggest in last three years after South Korean automaker Hyundai’s ₹27,000-crore issue. Others, including HDB Financial’s peer Tata Capital, Korean electronics company LG, and Indian startups Phonepe and Lenskart are among the other major issues lined up for listing.

Mr. Ramesh said the RBI mandate to list by September had some bearing on the timing of the issue.