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Indian largest private sector bank HDFC Bank is looking to sell its entire 100% stake in HDFC Education and Development Services.
The development comes as part of a strategic decision to divest through the Swiss challenge method, a bidding process that invites other interested parties to make counteroffers based on an initial bid.
Engaging interested parties
On March 30, 2024, HDFC Bank entered into a binding term sheet with an interested party. The term sheet serves as the anchor or base bid, setting the stage for other potential buyers to participate in the Swiss challenge process. The bank said it aims to ensure transparency and fairness in selecting the final purchaser through this competitive method.
"In furtherance of the aforesaid RBI direction and after due deliberation and in the interests of maintaining transparency in the proposed divestment, HDFC Bank has decided to undertake the sale of its 100% stake in HDFC Edu. (the “Proposed Transaction") using the Swiss challenge method. Upon the conclusion of the Swiss challenge process, HDFC Bank will proceed to select the purchaser," the bank said in its regulatory filing.
RBI's approval
The Reserve Bank of India (RBI) has previously granted HDFC Bank permission to retain its ownership in HDFC Education for two years following the merger between Housing Development Finance Corporation Limited (HDFC Ltd) and HDFC Bank.
Notably, the approval is crucial for the bank as it navigates through the divestment process, ensuring regulatory compliance and strategic alignment.
Finalizing the buyer based on Swiss challenge outcomes
HDFC Bank said it finalize the purchaser based on the outcomes of the Swiss challenge process. Upon identifying the successful bidder, the bank and the chosen buyer will proceed to draft and sign the definitive documentation for the transaction, adhering to the necessary regulatory disclosures and requirements.
HDFC Education and Development Services Private is known for providing services to three educational schools, playing a significant role in the educational sector.