SEBI Withheld Approval For HDB Financial and Hero FinCorp IPO

The proposed initial public offerings (IPOs) of two major non-banking financial companies—HDB Financial Services and Hero FinCorp—are facing delays in receiving approvals from India’s capital market regulator.

As per news reports, the Securities and Exchange Board of India (SEBI) has withheld approval for these much-anticipated IPOs, as share sales by these companies may have inadvertently violated regulations concerning unlisted companies.

Hero FinCorp’s IPO application has been pending with SEBI for eight months, while HDB’s has been under review for four months.

While the precise nature of the alleged violation remains unclear, it is believed to be related to pre-IPO share sales by these companies, according to the news reports.

Legal experts suggested that share sales by existing shareholders, potentially broadening the investor base within a fiscal year, could also be a factor.

Hero FinCorp, an affiliate of Hero MotoCorp, has filed a draft red herring prospectus for its ₹3,668 crore IPO. HDB Financial has submitted its draft documents for a ₹12,500 crore offering.

According to the status of the draft offer documents on SEBI’s website, Hero FinCorp is awaiting comments from other regulators and government agencies. For HDB Financial, the latest communication was received or issued on February 14, 2025.

Currently, HDB has over 41,409 public shareholders. In 2024, it issued more than 1.7 million shares to employees through stock options. Shares of HDB Financial are currently trading at around ₹1,050 in the unlisted market. The Reserve Bank of India has set a September 2025 deadline for HDB Financial to list, as it is categorized as an “upper layer” NBFC under the Scale-Based Regulations for 2024-25.

As of August 2024, Hero FinCorp had 7,452 public shareholders holding a 20.42% stake in the company, with shares trading at ₹1,400-1,450 in the unlisted market.

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