HDFC likely to appoint Jefferies for $1 bn Credila sale

By Staff Writer

  • 02 May 2023
Credit: VCCircle

India's largest mortgage financier, HDFC Ltd has picked Jefferies Financial Group Inc to manage the sale of a unit that offers student loans, said people familiar with the matter, adding that it could even seek a value of as much as $1 billion for HDFC Credila Financial Services Ltd. in a sale. 

HDFC Credila Financial Services Ltd sale is a part of the lender's moves to comply with regulators' requirements for its merger with the HDFC Bank Ltd, they said on the condition of anonymity. 

They also stated that Jefferies has started initial talks with interested bidders and a formal process for sale may be launched soon, according to Bloomberg News.

HDFC Bank, in an exchange filing last month, said that the Reserve Bank of India has given the merged entity two years to cut its stake in fully-owned Credila to 10%. 

The sale mandate will be one of the biggest managed by Jefferies in the country and will help in its ambition to build a deal advisory business in the local market, Bloomberg reported. 

The people reported that there is no decision on the valuation and time by which the sale will be completed. Spokespersons for HDFC and Jefferies declined to comment on it. 

The 17-year-old HDFC Credila is India’s first dedicated education loan company, information available on its website shows. The company's website reads that it had assets of 142.3 billion rupees ($1.7 billion) as of 31 December. 

HDFC will have to bring down its stake in HDFC Credila Financial Services to 10% over the next two years, and also stop onboarding new customers, according to the central bank’s conditions for its merger with HDFC Bank.

The housing finance major has been trying to sell its stake in Credila over the last one year. It had received interest from large private equity players and sovereign funds, but had kept talks on hold since it was awaiting clarity from RBI on the merger, the official said.