HDFC Bank has officially announced the divestment of its entire 100% stake in HDFC Education and Development Services Pvt. Ltd (HDFC Edu) to Vama Sundari Investments for ₹192 crore. This all-cash transaction, valued at ₹9.60 per share, aligns with the bank’s strategy to comply with regulatory requirements and streamline its operations following the merger with e-HDFC Ltd.
The divestment will occur in two phases: the sale of 91% of HDFC Edu’s shares is expected by October 31, 2024, while the remaining 9% must be sold by June 30, 2025. This move comes in response to a directive from the Reserve Bank of India (RBI), mandating that HDFC Bank fully divest from HDFC Edu within two years of the merger.
Transaction Breakdown
The stake sale will be executed in two phases:
- Phase 1: 91% of HDFC Edu’s shares will be sold by October 31, 2024.
- Phase 2: The remaining 9% will be divested by June 30, 2025.
Post the first phase, HDFC Edu will cease to be a subsidiary of HDFC Bank.
Financial Overview
For the financial year ending March 31, 2024, HDFC Edu reported a total income of ₹18.18 crore and total assets valued at ₹197.05 crore. The company operates in various educational segments, including K-12 management, vocational training, and educational consultancy.
Competitive Bid Process
The sale was conducted through a competitive bidding process, where Vama Sundari Investments emerged as the successful bidder. The transaction has received approval from HDFC Bank’s Audit Committee, ensuring compliance with related-party transaction regulations, as Vama Sundari is associated with HDFC Asset Management Company.
Market Impact
Following the announcement, HDFC Bank’s shares fell by ₹37.15, or 2.24%, ending the day at ₹1,619.65 on the Bombay Stock Exchange (BSE). This divestment reflects HDFC Bank’s focus on its core business and adherence to RBI guidelines, signaling a strategic shift in its operations while providing a new direction for HDFC Edu under Vama Sundari’s ownership.
HDFC Bank’s Stake Sale in HDFC Education and Development Services
| Key Points | Details |
|---|---|
| Why in News | HDFC Bank announced the sale of its 100% stake in HDFC Education and Development Services Pvt. Ltd (HDFC Edu) to Vama Sundari Investments for ₹192 crore. |
| Transaction Value | The all-cash deal is valued at ₹9.60 per share, totaling ₹192 crore. |
| Phased Divestment | Phase 1: 91% of shares sold by October 31, 2024. Phase 2: Remaining 9% sold by June 30, 2025. |
| Reason for Divestment | Compliance with the RBI directive following the merger with e-HDFC Ltd, requiring HDFC Bank to divest from HDFC Edu within two years. |
| Financials of HDFC Edu | FY ending March 31, 2024: Total income of ₹18.18 crore and total assets of ₹197.05 crore. |
| Sale Process | Conducted through a competitive bidding process, Vama Sundari Investments was the successful bidder. |
| Audit Approval | HDFC Bank’s Audit Committee approved the transaction, ensuring adherence to related-party transaction regulations. |
| Market Impact | HDFC Bank shares fell by ₹37.15 (2.24%), closing at ₹1,619.65 on the BSE following the announcement. |
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