Housing Development Finance Corporation (HDFC) is going to be merged with HDFC Bank and its preparations have been completed.
It was officially announced on Monday. Chairman Deepak Parekh said that after this transformational merger, HDFC will have a 41 per cent stake in the bank.
HDFC said on April 4 that its board has approved the merger of its wholly-owned subsidiaries HDFC Investment Ltd and HDFC Holdings Ltd with HDFC Bank Ltd.
According to the report, the merger process of HDFC-HDFC Bank is expected to be completed by the second or third quarter of FY 2024.
Bank has so much customer base
Deepak Parekh said that this merger will enable HDFC Bank to build its home loan portfolio and increase its existing customer base.
Parekh said that it is a merger of equals. We believe that the housing finance business is poised to grow rapidly due to government initiatives like the implementation of RERA.
The infrastructure status of the housing sector, and affordable housing for all. HDFC Bank has a large customer base of 6.8 crores.
Market cap will be higher than TCS
The market cap of the merged entity will be higher than that of Tata Consultancy Services (TCS). It is worth noting that at present, Mukesh Ambani's Reliance Industries is at number one and TCS is at number two.
After the merger, the public shareholders will have a 100% stake in HDFC Bank. After the merger, it will be the second-largest company by market cap, overtaking TCS.
This is how shares will be exchanged
Under the proposed deal, for every 25 equity shares of HDFC Ltd, 42 equity shares of HDFC Bank will be received.
HDFC Bank told the stock exchanges on Monday that the merger plan is subject to various regulatory approvals, including from the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI).
At present, the total assets of HDFC are Rs 6.23 lakh crore, while the assets of HDFC Bank are Rs 19.38 lakh crore.
Strong jump in stocks
HDFC Limited's subsidiaries and associates will be transferred to HDFC Bank. HDFC Vice Chairman and CEO Keki Mistry have said that this merger will bring huge benefits to the customer.
On the other hand, with the news of the merger, there has been a strong jump of 10-10 per cent in the shares of HDFC and HDFC Bank.