The merger of HDFC into HDFC Bank is likely to create the third-largest entity in India in terms of market capitalization.
In an exchange filing, HDFC announced that the company will merge itself with HDFC Bank following a union of subsidiaries HDFC Holdings and HDFC Investments. A similar announcement was made by HDFC Bank in a separate exchange filing.
It will merge with the private lender HDFC Bank. “The share exchange ratio for the amalgamation of the Corporation (HDFC Ltd) with and into HDFC Bank shall be 42 equity shares (credited as fully paid up) of the face value of Re 1 each of HDFC Bank for every 25 fully paid-up equity shares of the face value of ₹ 2 each of the Corporation,” HDFC stated in a regulatory filing.
“The merger is subject to the receipt of requisite approvals from the Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI), the Competition Commission of India, the National Housing Bank (NHB), the Insurance and Regulatory and Development Authority, the Pension Fund Regulatory and Development Authority, the National Company Law Tribunal, BSE Limited and the National Stock Exchange of India Limited and other statutory and regulatory authorities, and the respective shareholders and creditors,” it added.
HDFC Bank is a private sector bank and has a large base of over 6.8 crore customers. The bank platform will provide a well-diversified low-cost funding base for growing the long tenor loan book acquired by HDFC Bank according to the proposed transaction, the bank said.
HDFC Ltd is India’s largest housing finance company with total assets under management of Rs 5.26 lakh crore and a market cap of Rs 4.44 lakh crore. HDFC Bank is India’s largest private sector bank by assets with a market cap of Rs 8.35 lakh crore. Subsidiaries and associates of HDFC Ltd will become subsidiaries and associates of HDFC Bank.
Speaking about the merger, Deepak Parekh, Chairman of HDFC Limited, said, “this is a merger of equals. We believe that the housing finance business is poised to grow in leaps and bounds due to the implementation of RERA, infrastructure status to the housing sector, government initiatives like affordable housing for all, amongst others.”
HDFC Bank has total assets of Rs 19,38,285.95 crore as of December 31, 2021, turnover (includes other income) of Rs 116,177.23 crore for the nine months ended December 31, 2021. A net worth of Rs 223,394.00 crore as of December 31, 2021.
HDFC Bank has total assets of Rs 19,38,285.95 crore as of December 31, 2021, turnover (includes other income) of Rs 116,177.23 crore for the nine months ended December 31, 2021. A net worth of Rs 223,394.00 crore as on December 31, 2021.
Some market participants suggested that the move has been forced by the weak stock performance of HDFC and HDFC Bank over the past 18 months even as the wider equity market surged in the COVID bull run.
Before the merger, HDFC’s shares were languishing near their 52-week low while HDFC Bank’s stock has risen merely 4 percent in the past year.
At 9:37, shares of HDFC were up 10.75 percent at Rs 2,716 on the National Stock Exchange. While those of HDFC Bank were higher by 9 percent at Rs 1,641.