{"id":21565,"date":"2024-05-17T00:00:00","date_gmt":"2024-05-16T20:00:00","guid":{"rendered":"https:\/\/stockify.net.in\/?p=21565"},"modified":"2025-02-03T14:46:59","modified_gmt":"2025-02-03T10:46:59","slug":"japanese-bank-mufg-to-buy-20-stake-worth-2-billion-in-hdb-financial-services-hdfc-banks-nbfc-arm","status":"publish","type":"post","link":"https:\/\/tester-hub.com\/stockifyfintech\/blog\/japanese-bank-mufg-to-buy-20-stake-worth-2-billion-in-hdb-financial-services-hdfc-banks-nbfc-arm\/","title":{"rendered":"Japanese Bank MUFG to Buy 20% Stake worth $2 Billion in HDB Financial Services, HDFC Bank\u2019s NBFC Arm."},"content":{"rendered":"\n

Bloomberg\u2019s Report on Mitsubishi UFJ Financial Group Inc (MUFG) investing $2 billion in HDB Financial Services Ltd has emerged. As per the reports by Moneycontrol, this investment will value HDB at an impressive $10 billion. MUFC is the world\u2019s second-largest bank holding company.  HDB is a non-banking lender and subsidiary of HDFC Bank Ltd in India. Currently, HDFC holds a 94.8% stake in its NBFC arm. The remaining stakes are with the employees of the company in the form of ESOP.<\/p>\n\n\n\n

HDFC\u2019s CFO, Srinivasan Vaidyanthan, has also hinted at the IPO of HDB Financial Services in the coming months. As under the regulatory guidelines, HDB needs to be listed by September 2025. The proposed MUFG investment will result in a 20% stake transfer to MUFG and will boost the company\u2019s IPO ahead of its IPO.<\/p>\n\n\n\n

What does this proposed deal indicate?<\/h2>\n\n\n\n

The proposed deal with MUFG in HDB Financial Services highlights the interest of international financial institutions in India\u2019s growing non-bank lending sector. This deal also asserts the attractiveness of India\u2019s NBFC sector. As per the initial reports by Economic Times, MUFG\u2019s offered investments in HDB Financial services emphasize its interest in expanding its presence in India\u2019s financial sectors. <\/p>\n\n\n\n

The potential stake sale to MUFG will provide HDB with access to additional capital and resources required for its growth. Overall, this proposed deal indicates high confidence in India\u2019s financial markets among global investors.<\/p>\n\n\n\n

How did HDB Financial Services perform financially?<\/h2>\n\n\n\n

In FY23, the total revenue of HDB from operations stood at Rs. 12,403 crores. The Profit after Tax was at Rs. 1,959 crore. Its AUM has increased from Rs. 70,084 crores on March 31, 2023, to Rs. 83,989 crores on December 31, 2023. HDB\u2019s Secured loans comprise 75.8% of the total portfolio. The company has also reduced its Non-performing assets to 2.25% due to which its profitability has increased. CRISIL\u2019s rating of AAA indicates a strong presence of HDB in the retail finance space. The company also has a healthy capital position as reflected in its Tier-1 capital adequacy ratio and an overall CAR of 15.91%. <\/p>\n\n\n\n

HDB\u2019s Financial Services\u2019 diverse product portfolio<\/h2>\n\n\n\n

With a strong footing in the non-bank lending sector, HDB Financial has established itself as a market leader in various loan segments. It has a diversified portfolio that caters to both retail and commercial clients.HDB standalone can maintain its strong position in the retail financial space. The three main categories of HDB include loans, fee-based products, and BPO services. BPO Services include collecting dues from borrowers.<\/p>\n\n\n\n

Loans include consumer loans and enterprise loans. Consumer loans portfolio includes:<\/p>\n\n\n\n