In a significant development for the financial services sector, HDFC Credila Financial Services, renowned as the largest provider of education loans in India, has begun preparations for its Initial Public Offering (IPO) slated for next year. The company has recently shortlisted five leading investment banks to manage this anticipated IPO, underscoring its commitment to enhancing its capital structure and expanding its services.
Shortlisted Investment Banks
According to sources privy to the negotiations, the investment banks selected for the IPO process include Jefferies, Citi, Axis Capital, IIFL Capital, and BofA Securities. These institutions are expected to play a crucial role in shaping the IPO strategy and ensuring a successful market entry for HDFC Credila.
IPO Goals and Financial Projections
Funding Aspirations
HDFC Credila aims to raise approximately Rs 5,000 crore through this public listing. The exact amount will vary depending on the extent of stake sold by current investors. The company’s recent transition to a consortium ownership structure, led by Swedish investment firm EQT and private equity giant ChrysCapital, has prompted this move towards public listing.
Current Stakeholders
EQT and ChrysCapital currently hold more than 50% of HDFC Credila’s stake, while HDFC Bank and Sinhan Bank of South Korea also maintain minority interests in the company. Attempts to gather comments from these stakeholders have been unsuccessful as they have either declined to comment or did not respond to inquiries.
Growing Trend of Education Loan IPOs
HDFC Credila is not alone in its IPO ambitions. In a broader trend within the education finance sector, Avanse Financial Services, another Mumbai-based entity, has filed draft IPO papers with the Securities and Exchange Board of India (SEBI), aiming to raise Rs 3,500 crore. This increasing interest in public offerings reflects the growing need for education financing solutions in India.
Industry Insights
The surge in education loan requirements, amplified by rising enrollment rates in higher education, has positioned companies like HDFC Credila and Avanse Financial as key players within this expanding market. HDFC Credila has financed education for over 178,000 students, boasting a total income of Rs 2,771.04 crore as of the financial year ending March 31, 2024, alongside a profit after tax of Rs 528.84 crore.
Loan Categories
The company’s offerings primarily include two types of education loans: secured and unsecured. Notably, around 21% of its loan portfolio consists of secured loans, indicating a diversified risk approach while catering to varying customer needs.
