Banking News

RBI approves HDFC Bank’s 90% stake sale in HDFC Credila to ChrysCapital and BPEA EQT


HDFC Bank received approval from the Reserve Bank of India (RBI) to sell its 90% stake in the education loan company HDFC Credila Financial Services Ltd- a move that will boost private lender’s income in the fourth quarter.

HDFC, the erstwhile term lending institution, had executed a definitive agreement to divest 90% of its stake in HDFC Credila subject to approval from the regulator, a stock exchange notice on June 19 said.

On July 1, last year, HDFC Ltd, the parent housing finance company, was amalgamated with HDFC Bank. Thus, the entire investment was transferred from the parent to the bank.

Bank analysts say that HDFC Bank’s other income for the fourth quarter will reflect about Rs 9000 crore as earnings on selling its stake in HDFC Credila.

The housing finance company had agreed to sell its stake to private equity firm ChrysCapital and BPEA EQT (earlier known as Barings Private Equity Asia). The private lender will hold a 10% stake in the education loan company.

As per a credit rating report by Care Ratings dated December 19, 2023, HDFC has infused Rs 1,880 crore in HDFC Credila over the past six years, with the last infusion being in June 2023 of Rs 700 crore.The education loan company has an agreement with the new investors to bring in a fresh equity infusion of Rs 2,000 crore as part of the transaction post-stake sale completion to support growth in operations. The rating report said that HDFC Ltd brought in Rs 700 crore on behalf of the investors to support operations.CARE Ratings said it understands that the balance Rs 1,300 crore would be made available on a need basis by the new promoter.

RBI approved the stake sale last week, while the Competition Commission of India CCI approved it in June 2023.

HDFC Credila has assets under management of Rs 22636 crore as of the end of September 2023, and its profit after tax stood at Rs 233 crore in the same period.

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