new Delhi: Housing finance company HDFC will merge with India’s largest private lender HDFC Bank.
According to news reports, mortgage lender HDFC will acquire 41 per cent stake in HDFC Bank through a transformational merger, according to HDFC Bank’s filings with stock exchanges.
HDFC on Monday said its board has approved the merger of its wholly owned subsidiaries HDFC Investment Ltd and HDFC Holdings Ltd with HDFC Bank Ltd.
The merger of HDFC and HDFC Bank is expected to be completed by the second or third quarter of FY24.
According to a Reuters report, HDFC shareholders will get 42 shares of the bank for 25 shares. The existing shareholders of HDFC will own 41 per cent of HDFC Bank. The shares held by the mortgage lender in the bank will be liquidated, making HDFC Bank a wholly public company.
HDFC said the proposed transaction will enable HDFC Bank to build its home loan portfolio and enhance its existing customer base.
In a regulatory filing, the companies said HDFC’s subsidiaries and associates will be transferred to HDFC Bank.
HDFC’s stock rose 8.37 per cent to Rs 2,656, while HDFC Bank’s share gained nearly 8 per cent to Rs 1,623.
According to the news report, HDFC Ltd Chairman Deepak Parekh said, “It is an equal merger. We believe that the housing finance business is poised to grow rapidly due to government initiatives like implementation of RERA, infrastructure status to the housing sector, affordable housing for all. Over the years, various regulations for banks and NBFCs have been harmonized, enabling possible mergers. In addition, the resulting large balance sheet will allow underwriting of big ticket infrastructure loans, accelerate the pace of credit growth in the economy, promote affordable housing and increase the quantum of credit to the priority sector, including credit to the agriculture sector.