new Delhi:
Mortgage lender HDFC on Monday announced that it will merge with private lender HDFC Bank. Under the proposed deal, HDFC Ltd shareholders will receive 42 shares of the bank for 25 shares. The companies expect the deal – subject to regulatory approval – to be completed in the second or third quarter of the fiscal year beginning April 2023.
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“The share exchange ratio for amalgamation with the Corporation (HDFC Ltd.) and in HDFC Bank shall be 42 equity shares (fully paid as fully paid up) of HDFC Bank of face value of Re 1 each of HDFC Bank for every 25 full paid-up of the Corporation. equity shares of face value of Rs 2 each,” HDFC said in a regulatory filing.
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Existing shareholders of HDFC Ltd will own 41 per cent of HDFC Bank, the combined entity, which will become a wholly public company as the housing finance company’s stake in the lender will be canceled in the deal.
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“Merged with Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI), Competition Commission of India, National Housing Bank (NHB), Insurance and Regulatory and Development Authority, Pension Fund Regulatory and Development Authority, 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,” HDFC said.
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As of today, HDFC Ltd., along with its two wholly owned subsidiaries (HDFC Investments Ltd. and HDFC Holdings Ltd.), hold 21 per cent of the paid-up equity share capital of HDFC Bank.
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“HDFC Bank has access to funds at a lower cost due to its high level of current and savings account deposits (CASA). With the amalgamation, HDFC Bank will be able to offer more competitive housing products. The proposed transaction will result in HDFC Bank The income of the bank will come down in the ratio of risk to unsecured loans,” the mortgage lender added.
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HDFC Chairman Deepak Parekh said, “It is a merger of equals. We believe that the housing finance business has the potential to grow in leaps and bounds due to the implementation of RERA, infrastructure status for the housing sector, government initiatives like affordable housing. For all, among others.”
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Later at a media briefing, Mr. Parekh said, “The housing finance business is poised to grow. The merger will accelerate the pace of credit growth.” He said the combined balance sheet of the merged entity would be Rs 17.87 lakh crore and total assets would be Rs 3.3 lakh crore. Mr. Parekh also said that the HDFC-HDFC Bank merger will not have any impact on the employees of HDFC Ltd.
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Shares of HDFC Twins (HDFC and HDFC Bank) rose 15.02 per cent and 13.61 per cent, respectively, in opening deals.
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Currently, HDFC has total assets of Rs 6.23 lakh crore, while HDFC Bank has assets of Rs 19.38 lakh crore. HDFC Bank has a huge customer base of 68 crores.
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Sameer Bahl, CEO, Investment Banking, Anand Rathi Advisors said, “This is India’s largest and most transformative merger in the Indian financial services sector. With this merger, HDFC Bank gets a unique advantage through the mortgage portfolio that it offers. Provides quantum leap forward. Distribution in semi-urban and rural areas has a huge opportunity to sell bank products to a very sticky customer base. The combined entity will be able to extract substantial synergy benefits which will augur well for all stakeholders and shareholders. kind of lives.”