Merger with HDFC Bank will not impact HDFC's employees: Deepak Parekh
Once the deal is effective, HDFC Bank will be 100 per cent owned by public shareholders, and existing shareholders of HDFC will own 41 per cent of the bank.
- Apr 4, 2022,
- Updated Apr 4, 2022 3:44 PM IST
In the biggest merger in corporate history, India's largest housing finance company HDFC Ltd will merge with the country's largest private lender HDFC Bank to create a banking behemoth. "This is a merger of equals," said Deepak Parekh, chairman of HDFC Ltd, in a press conference held post-announcement, adding that the merger "will not impact employees of HDFC Ltd".
Once the deal is effective, HDFC Bank will be 100 per cent owned by public shareholders, and existing shareholders of HDFC will own 41 per cent of the bank, according to stock exchange filings by the firms.
Every HDFC shareholder will get 42 shares of HDFC Bank for 25 shares held.
ALSO READ: HDFC twins merger: Deepak Parekh foresees cross selling, m-cap gain benefits
"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," Parekh added.
HDFC Vice-Chairman and CEO Keki Mistry said, "This merger will make HDFC Bank a large lender even by global standards. It will make more room for FII holding in HDFC Bank." The HDFC-HDFC Bank merger is expected to be completed by the second or third quarter of FY24.
HDFC said the proposed transaction will enable HDFC Bank to build its housing loan portfolio and enhance its existing customer base.
The merger is subject to regulatory approvals from the RBI and other regulatory authorities.
Following the announcement, HDFC Bank shares jumped as much as 14.4 per cent, giving the firm a market value of Rs 9.54 lakh crore, while HDFC Ltd surged 19.6 per cent to a valuation of Rs 5.31 lakh crore.
ALSO READ: HDFC twins merger: Coming together of equals, says Deepak Parekh
As on date, HDFC has total assets of Rs 6.23 lakh crore, while HDFC Bank has assets worth Rs 19.38 lakh crore.
HDFC Bank has a large customer base of 6.8 crore and a well-diversified low-cost funding base for growing the long-tenor loan book. Leveraging this distribution might, the proposed merger would broaden the home loan offering.
With this merger, HDFC Bank will get an unparalleled advantage through the mortgage portfolio providing it a quantum leap in distribution to semi-urban and rural areas with a huge opportunity to cross-sell bank products to a "very very sticky" client base.
The combined entity will be able to extract substantial synergy benefits.
(With inputs from agencies)
In the biggest merger in corporate history, India's largest housing finance company HDFC Ltd will merge with the country's largest private lender HDFC Bank to create a banking behemoth. "This is a merger of equals," said Deepak Parekh, chairman of HDFC Ltd, in a press conference held post-announcement, adding that the merger "will not impact employees of HDFC Ltd".
Once the deal is effective, HDFC Bank will be 100 per cent owned by public shareholders, and existing shareholders of HDFC will own 41 per cent of the bank, according to stock exchange filings by the firms.
Every HDFC shareholder will get 42 shares of HDFC Bank for 25 shares held.
ALSO READ: HDFC twins merger: Deepak Parekh foresees cross selling, m-cap gain benefits
"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," Parekh added.
HDFC Vice-Chairman and CEO Keki Mistry said, "This merger will make HDFC Bank a large lender even by global standards. It will make more room for FII holding in HDFC Bank." The HDFC-HDFC Bank merger is expected to be completed by the second or third quarter of FY24.
HDFC said the proposed transaction will enable HDFC Bank to build its housing loan portfolio and enhance its existing customer base.
The merger is subject to regulatory approvals from the RBI and other regulatory authorities.
Following the announcement, HDFC Bank shares jumped as much as 14.4 per cent, giving the firm a market value of Rs 9.54 lakh crore, while HDFC Ltd surged 19.6 per cent to a valuation of Rs 5.31 lakh crore.
ALSO READ: HDFC twins merger: Coming together of equals, says Deepak Parekh
As on date, HDFC has total assets of Rs 6.23 lakh crore, while HDFC Bank has assets worth Rs 19.38 lakh crore.
HDFC Bank has a large customer base of 6.8 crore and a well-diversified low-cost funding base for growing the long-tenor loan book. Leveraging this distribution might, the proposed merger would broaden the home loan offering.
With this merger, HDFC Bank will get an unparalleled advantage through the mortgage portfolio providing it a quantum leap in distribution to semi-urban and rural areas with a huge opportunity to cross-sell bank products to a "very very sticky" client base.
The combined entity will be able to extract substantial synergy benefits.
(With inputs from agencies)