HDFC Bank and parent HDFC inched closer to the merger process as stock exchanges give thumbs up to their amalgamation scheme. The companies received ‘observation letters’ from stock exchanges, BSE, and NSE dated July 2.
Both HDFC Bank and HDFC have received ‘no adverse observations’ from BSE and a ‘no objection’ from the National Stock Exchange of India (NSE).
In their separate regulatory filing, HDFC Bank and HDFC said, “The Scheme remains subject to various statutory and regulatory approvals inter alia including approvals from the Competition Commission of India, Reserve Bank of India, the National Company Law Tribunal, and the respective shareholders and creditors of the companies involved in the Scheme, as may be required.”
Earlier on April 4, HDFC Bank announced that parent HDFC will merge with the bank to enable seamless delivery of home loans and leverage on the large base of over 68 million customers of HDFC Bank and inter alia improve the pace of credit growth in the economy.
The proposed merger is to create a large balance sheet and net worth that would allow a greater flow of credit into the economy. It will also enable the underwriting of larger ticket loans, including infrastructure loans, an urgent need of the country.
Under the scheme, HDFC shareholders will receive 42 shares of HDFC Bank having a face value of Re 1 each for 25 shares of HDFC having a face value of ₹2 each. Further, HDFC shareholding in HDFC Bank will be extinguished as per the scheme of amalgamation.
Post the merger, HDFC Bank will be 100% owned by public shareholders and existing shareholders of HDFC will own 41% of the former.
HDFC Bank, with more than 68 million customers, 6,342 branches, and a full suite of credit, liability, and distribution offerings is the leading private sector bank with deep relationships, insights, and understanding of its customers built over multiple decades.
HDFC is India’s premier housing finance company and has unrivaled relationships, scale, and deep underwriting expertise in the housing sector, built over multiple decades and across economic cycles.
The combined entity will bring together complementary strengths of the two organizations, enabling a rewarding customer relationship. Post the combination, HDFC Bank’s customers will be offered mortgages as a core product in a seamless manner. HDFC Bank will also leverage the long tenor mortgage relationship to offer varied credit and deposit products enabled through better insights throughout the customer life-cycle, as per the regulatory filing on April 4.
The merger is expected to be completed within 18 months.
Last week, on Friday, on BSE, HDFC Bank shares closed at ₹1,353.65 apiece up 0.46%. HDFC finished at ₹2,210.65 apiece up 2.18%.
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