HDB's IPO pricing reflects investor inputs: I-bankers

Issue price band set at ₹700-740 per share

- SUBRATA PANDA & SAMIE MODAK

The steep pricing cut in the initial public offering (IPO) of HDB Financial Services came after feedback from high-quality institutional investors -- including mutual funds, insurance companies, and leading foreign portfolio investors (FPIs) -- following extensive roadshows, according to the company's management and investment bankers involved in the offer.

The IPO, which opens on June 25 and closes on June 27, has kept a price band of ₹700-740 per share, significantly below levels at which the lender's shares were trading in the unlisted market. Anchor investors can subscribe on June 24.

HDFC Bank, which promotes HDB, may be required to reduce its stake to below 20 per cent if a draft circular issued by the Reserve Bank of India (RBI) is implemented. The proposed rule seeks to prevent overlapping lending activity between banks and their group entities.

Investment bankers said pricing in the unlisted space is without any input from the management.

"How the particular share trades in the unlisted market actually has no dimension of any engagement of a company, the management or the dealers," said Sonia Dasgupta, managing director and CEO of the investment banking division at JM Financial, one of the lead bookrunners for the IPO. "We have looked at it (the pricing) like any other IPO and evaluated what would be the right pricing for us to engage with investors."