HDFC Bank on Monday, April 4, said its board has approved the merger of HDFC Investments and HDFC Holdings with Housing Development Finance Corporation Ltd or HDFC Ltd and merger of HDFC Ltd with HDFC Bank, thereby creating a banking giant Is. After the deal goes into effect, HDFC bank According to stock exchange filings by the firms, the shares will be 100 per cent owned by the public shareholders, and existing shareholders of HDFC will hold 41 per cent of the bank. The merger is set to make the company the third most valuable in the country.
“The Board of Directors of HDFC Bank has also approved for execution of an Implementation Agreement between HDFC Ltd and HDFC Bankwhich, inter alia, determines the manner of carrying out the proposed transaction under the Scheme, the representations and warranties to be made by each party and the rights and obligations of the parties concerned in respect of the proposed transaction,” the private lender said in a statement. Said filing with BSE.
Here are important things you need to know about the HDFC-HDFC Bank merger:
1. every HDFC Shareholders For 25 shares, 42 shares of HDFC Bank will be available. Deepak Parekh, Chairman, HDFC Ltd. said, “It is a merger of equals. We believe that the housing finance business is poised to grow rapidly due to the implementation of RERA, infrastructure status to the housing sector, Government initiatives for all. Like affordable housing, among others.” Keki Mistry, Vice Chairman and CEO of HDFC.
2. Taking advantage of this distribution, the proposed merger will widen the home loan offering. With this merger HDFC Bank gets an unparalleled advantage through the mortgage portfolio, which gives it a huge opportunity to sell bank products to a very sticky customer base across distribution in semi urban and rural areas.
3. “HDFC-HDFC Bank merger will increase the group’s market shares in the mortgage business, thereby passing on the benefit of lower cost of funds to the mortgage business, diversification of assets in the merged entity, this merger will give the combined entity makes it strong enough to offer more. Financing challenges for its existing clients and others will be reduced with the addition of competing products and the merger of the two entities,” said Jitendra Upadhyay, Senior Equity Research Analyst, Bonanza Portfolio Ltd.
4. “This merger will help in expanding the customer base and creating a product portfolio in the housing loan category. We look forward to a great future ahead for this giant and this merger could be a game-changer in their segment. Manoj Dalmiya, Founder & Director, Profitable Equities Pvt Ltd, said, Recommend to buy this stock and deposit it on the downside.
5. “HDFC Bank registers 21 per cent year-on-year credit growth and retail deposit growth is healthy. Strong commercial banking and corporate segments can also see a jump in operating profit. The merger of HDFC Bank and HDFC is complementary for investors and a value addition for HDFC Bank,” said Ravi Singhal, Vice President, GCL Securities Ltd.
6. “This was a long awaited gesture by the company and the shareholders. “This merger will create long-term wealth for the shareholders of the companies,” said IBMM Sudhanshu Singh, Director, Moneymakers India Securities.
7. The merger is however subject to approvals from the Reserve Bank of India (“RBI), Securities and Exchange Board of India (SEBI), Competition Commission of India, National Housing Bank (NHB), Insurance Regulatory and Development Authority, Government of India, Pension Fund Regulatory and Development Authority, National Company Law Tribunal, SSE Limited and National Stock Exchange of India Limited and other statutory and regulatory authorities, and the respective creditors and shareholders of the Company.
8. About eight years ago, the HDFC-HDFC Bank talks attracted much interest, when the Reserve Bank of India allowed banks to issue long-term bonds for infrastructure and affordable housing. At the time, key officials of both the entities had denied any such offer.
9. The merger also propelled the markets that day, as shares of HDFC and HDFC Bank saw heavy buying on Monday and investors closed the announcement with gains of around 10 per cent.
10. The Sensex jumped 1,335 points while the Nifty crossed the 18,000 mark on Monday, fueled by index heavyweights HDFC twins, rising nearly 10 per cent after the announcement of corporate India’s biggest merger. India’s largest housing finance company HDFC Ltd will merge with country’s top private lender HDFC Bank to create a banking giant with a combined balance sheet of around Rs 17.87 lakh crore.
(with agency input)
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