RBI approves HDFC Bank's 90% stake sale
The Reserve Bank of India (RBI) has given DFC Bank permission to sell its 90% ownership in HDFC Credila Financial Services Ltd., an education lending company. This transaction will increase the private lender's revenue in the fourth quarter.
According to a stock exchange notification on June 19, HDFC, the former term lending institution, had signed a formal deal to sell 90% of its stake in HDFC Credila, pending regulator approval.
On July 1st of last year, HDFC Ltd., the main home finance company, amalgamated with HDFC Bank. Consequently, the father gave the bank the whole investment.
Experts in banking predict that almost Rs 9000 crore of HDFC Bank's other revenue in the fourth quarter will come from the sale of the bank's stake in HDFC Credila.
The private equity firms ChrysCapital and BPEA EQT (formerly known as Barings Private Equity Asia) had agreed to purchase the housing finance company's portion. The private lender will own ten percent of the education loan company.
In June 2023, HDFC made a last investment of Rs 700 crore into HDFC Credila, as per a credit rating report by Care Ratings dated December 19, 2023. Over the previous six years, HDFC has invested Rs 1,880 crore in the company.
As part of the transaction following the conclusion of the stake sale, the education loan company has an agreement with the new investors to bring in a fresh equity investment of Rs 2,000 crore to support expansion in operations. According to the rating assessment, HDFC Ltd raised Rs 700 crore from investors to fund its operations.
CARE Ratings stated that it is aware that the new promoter will only provide the remaining Rs 1,300 crore when needed.
The Competition Commission of India (CCI) approved the stake sale in June 2023, but the RBI approved it this week.
By the end of September 2023, HDFC Credila had assets under management of Rs 22636 crore, while its profit after tax was Rs 233 crore during that same time.
The sale of the stake was approved by the RBI last week and by the Competition Commission of India (CCI) in June 2023.
By the end of September 2023, HDFC Credila had assets under management of Rs 22636 crore, while its profit after tax was Rs 233 crore during that same time.
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