HDFC Bank to sell 2% stake in NSDL IPO; lender to announce Q1 results on July 17
HDFC Bank Ltd, a private lender in India, has announced that it will release its financial results for the quarter ending June 30, 2023, on July 17. This marks a departure from the bank’s usual practice of announcing results on Saturdays.
The announcement of the results comes shortly after the mega-merger between HDFC and HDFC Bank, indicating a significant event for the bank and its stakeholders.
In a stock exchange filing on Saturday, HDFC Bank stated that a meeting of its Board of Directors will be held on Monday, July 17, 2023, to discuss various matters, including the unaudited standalone and consolidated financial results for the first quarter ending June 30, 2023.
The release of financial results provides insight into the bank’s performance and allows investors, analysts, and stakeholders to assess its financial health and progress during the given quarter.
HDFC Bank has announced its plans to sell a 2% stake in the upcoming initial public offering (IPO) of National Securities Depository Limited (NSDL). NSDL is a prominent depository in India that handles a majority of securities held and settled in dematerialized form in the Indian capital market.
Currently, HDFC Bank holds an 8.95% stake in NSDL. As part of the IPO, HDFC Bank will sell a portion of its holding, amounting to a 2% stake. This offering is classified as a complete offer-for-sale (OFS), which means that the shares being offered for sale are from existing shareholders rather than the company issuing new shares.
The draft red herring prospectus (DRHP) states that the IPO will consist of more than 5.72 crore equity shares being sold by six shareholders. Alongside HDFC Bank, other shareholders participating in the OFS include IDBI Bank (2.22 crore shares), National Stock Exchange (NSE) (1.80 crore shares), Union Bank of India (56.25 lakh shares), State Bank of India (40 lakh shares), and HDFC Bank (40 lakh shares).
This IPO provides an opportunity for these shareholders to divest a portion of their stake in NSDL, allowing them to monetize their investments. The IPO process will involve the sale of shares to the public, with the proceeds going to the selling shareholders rather than NSDL itself.
In addition to the stake sales by HDFC Bank and other shareholders, the Administrator of the Specified Undertaking of the Unit Trust of India (SUUTI) will sell 34.15 lakh shares of NSDL in the upcoming IPO.
The draft papers propose that the shares of NSDL will be listed on the Bombay Stock Exchange (BSE). A portion of the IPO will be reserved for eligible employees of NSDL, and the company may offer a discount to them on the IPO price.
As of the financial year 2023, NSDL reported revenue of Rs 1,099.81 crore and a net profit of Rs 234.81 crore. These figures indicate growth compared to the previous fiscal year, reflecting the company’s improving financial performance.
The specific sale price for the shares of NSDL in the IPO will be determined at a later stage when the final offer price is established. This pricing will be decided based on market conditions and investor demand.
In relation to the merger between HDFC Limited and HDFC Bank, HDFC Bank recently announced that HDFC Investments and HDFC Holdings have been amalgamated with and into HDFC Limited. This merger took effect on July 1, 2023, resulting in the dissolution of HDFC Investments and HDFC Holdings. This corporate restructuring aims to streamline the operations and structure of the HDFC Group, creating synergies and enhancing efficiency.
Every shareholder of HDFC Limited will receive 42 shares of HDFC Bank for every 25 shares they hold. The board of directors of HDFC Bank, in consultation with HDFC Limited’s board of directors, has set July 13, 2023, as the date for determining the shareholders of HDFC Limited who will be issued shares of HDFC Bank.
Furthermore, July 13 has been determined as the date for the continuation of warrants of HDFC Limited in the name of HDFC Bank, and July 12 for the transfer of non-convertible debentures, while July 7 is designated for the transfer of commercial papers of HDFC Limited in the name of HDFC Bank.
The reverse merger of HDFC Limited with its subsidiary HDFC Bank has resulted in the merged entity having a total business of over Rs 41 lakh crore, bringing it closer in size to the country’s largest lender, State Bank of India (SBI). Following the merger, HDFC Bank became the fourth most valued lender globally and narrowed the asset size gap with SBI, becoming the second-largest bank in India. The net worth of the merged entity is expected to exceed Rs 4.14 lakh crore.
