HDFC will merge with HDFC Bank
Leading housing finance company Housing Development Finance Corporation (HDFC) will merge with HDFC Bank, India’s leading private lender, according to a regulatory filing on Monday.
HDFC on Monday said its board has approved the merger of its wholly owned subsidiaries HDFC Investments Ltd and HDFC Holdings Ltd with HDFC Bank Ltd.
The HDFC-HDFC Bank merger is expected to be completed by the second or third quarter of FY24. After the merger, HDFC Bank will be 100 per cent owned by the public shareholders and the existing shareholders of HDFC Ltd will hold 41 per cent of HDFC Bank.
HDFC said the proposed transaction will enable HDFC Bank to build its home loan portfolio and enhance its existing customer base.
Ravi Singhal, Vice President, GCL Securities Ltd said, “This merger will prove beneficial for both as HDFC Ltd Holding Company will come out of exemption while HDFC Bank will now get more home loans in its portfolio.”
Ravi Singh, Vice President and Research Head, Share India said that strong commercial banking and corporate segments will see a jump in operating profit. “The merger of HDFC Bank and HDFC is complementary for investors and a value addition to HDFC Bank.”
HDFC Bank said in a filing on Monday that the scheme of amalgamation would be subject to various regulatory approvals, including from the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI).
Under the proposed deal, the share exchange ratio will be 42 equity shares of HDFC Bank for every 25 equity shares held in HDFC Ltd.
“…after considering the recommendation and report of the Audit Committee and the Committee of Independent Directors, the Board of Directors of HDFC Bank in its meeting held on April 4, 2022, approved a comprehensive plan for amalgamation of HDFC Investments and HDFC Holdings , in Housing Development Finance Corporation Limited (HDFC Limited) and with HDFC Limited in HDFC Bank and their respective shareholders and creditors,” the filing said.
Manoj Dalmiya, Founder and Director Kushal Equity, said.