HDFC-HDFC Bank Merger Proposal Receives Go-Ahead From BSE, NSE

04 July 2022

HDFC Bank and parent HDFC inched closer to the merger process as stock exchanges give thumbs up to their amalgamation scheme. HDFC Bank has received an observation letter with ‘no adverse observations’ from BSE and an observation letter with ‘no objection’ from the National Stock Exchange of India, both dated July 02, 2022, in relation to the proposed composite scheme of amalgamation for the amalgamation of: (i) HDFC Investments and HDFC Holdings, wholly-owned subsidiaries of Housing Development Finance Corporation (HDFC), with and into HDFC and (ii) HDFC with and into HDFC Bank.

After the merger with HDFC, HDFC Bank will become one of the largest banks in the world. This deal is worth about Rs 4.53 lakh crore, which is the second-largest business deal so far in 2022 this year. On completion of this deal, after the merger, the market cap of the bank can reach closer to Rs 15.12 lakh crore. This merger of HDFC and HDFC Bank is expected to be completed by the second or third quarter of the fiscal year 2024.After the merger, HDFC Bank will be 100% owned by public shareholders, while existing shareholders of HDFC will own 41% of HDFC Bank. The subsidiaries and associates of HDFC will shift to HDFC Bank.

This means that HDFC will acquire a 41% stake in HDFC Bank through the transformational merger. Every 25 shares held by HDFC shareholders will fetch them 42 shares of the bank. The merger created an entity that will have a market cap of Rs 12.8 lakh crore and a balance sheet of Rs 17.9 lakh crore.