Shares of banking major HDFC Bank Ltd surged in the early morning trade today following the Reserve Bank of India's green signal for the sale of around 90% stake in education loan unit HDFC Credila Financial Services Ltd. The lender had announced the sale of 90% stake in the education loan subsidiary to a consortium of private equity firms including BPEA EQT and ChrysCapital group for ₹9,060 crore in June 2023. The deal represents the "largest-ever private equity buyout" in the Indian financial services sector.
According to the bank, the RBI on February 23, 2024, granted its approval to HDFC Bank for the proposed change in control and consequent change in the constitution of the board of directors of HDFC Credila.
"This is in connection with our earlier intimation dated June 19, 2023, wherein we had informed that erstwhile Housing Development Finance Corporation Limited (“HDFC Limited”) had executed definitive documents on the said day, for disinvestment/sale of approximately 90% of HDFC Credila’s total issued and paid-up share capital, to the Acquirers (the “Proposed Transaction”), subject to regulatory approvals and dispensations (including the RBI and Competition Commission of India (“CCI”)," HDFC Credila says via an exchange filing.
On June 19, 2023, HDFC Bank had executed the said definitive documents as a party being the successor entity of HDFC Limited. The bank had merged with its housing lender parent HDFC Ltd on July 01, 2023, and accordingly, the entire investment of HDFC Ltd in HDFC Credila was transferred to HDFC Bank.
The transaction records the sale of around 13,29,49,207 shares of HDFC Credila. Additionally, the corporation will have the right to nominate 1 non-executive nominee director on the board of HDFC Credila on terms as agreed under the shareholders' agreement. The consortium valued HDFC Credila at a pre‐money valuation of ₹10,350 crore and will infuse primary proceeds of ₹2,000 crore into the company. HDFC will continue to remain invested with a stake of 9.99% in HDFC Credila.
HDFC Credila's revenue during FY2022-23 stood at ₹1,352.18 crore, while its net worth as of March 31, 2023 was ₹2,435.09 crore. Established in 2006 and headquartered in Mumbai, HDFC Credila claims to be one of India’s premier non‐bank lenders in the education finance space. It provides education loans to students pursuing higher education in India and overseas. The company says it has extended loans to over 1.24 lakh customers, with the current loan book at over ₹15,000 crore.
HDFC Bank shares are currently trading 0.40% up at ₹1,426.65, up 5.75 points or 0.40% on the BSE.
Notably, HDFC Bank’s net interest income stood at ₹28,471 crore in Q3 FY24, up 4% QoQ, and up 23.9% YoY. The bank’s quarterly net profit stood at ₹16,373 crores. But, NIM remained stable sequentially at 3.6% and there was compression on a YoY basis.
