HDFC Bank on Monday said its board has approved the amalgamation of HDFC Investments and HDFC Holdings with HDFC and that of HDFC into HDFC Bank. Here are the salient features of the scheme.
- As part of the merger between HDFC and HDFC Bank, 42 shares of HDFC Bank would be given for every 25 shares of HDFC.
- Post the above, HDFC Bank will be 100 per cent owned by public shareholders and existing shareholders of HDFC will own 41 per cent of HDFC Bank.
- The board of directors of HDFC Bank has also accorded approval for the execution of an implementation agreement between HDFC and HDFC Bank, which inter alia sets out the manner of implementing the proposed transaction contemplated under the scheme, the representations and warranties being given by each party and the rights and obligations of the respective parties in relation to the proposed transaction,” the bank said in a BSE filing.
- HDFC has total assets of Rs 6,23,420.03 crore, turnover of Rs 35,681.74 crore and net worth of Rs 1,15,400.48 crore as on December 31, 2021. HDFC Bank, on the other hand, has total assets of Rs 19,38,285.95 crore, turnover (includes other income) of Rs 1,16,177.23 crore for the nine months ended December 31, 2021, and net worth of Rs 2,23,394.00 crore, as on December 31 , 2021.
- Bank of America Merrill Lynch (BofA) Securities was financial advisor to HDFC, solely for the purpose of providing a fairness opinion on the valuation done by the valuer for the proposed transaction.
HDFC Bank said the proposed transaction is at arm’s length basis.
- A notification adds that the share exchange ratio has been determined based on joint valuation report issued by the independent valuers, supported by a fairness opinion by a SEBI registered merchant banker.
- HDFC Bank said the proposed transaction, will enable HDFC Bank to build its housing loan portfolio and enhance its existing customer base. The private lender said the proposed transaction is based on leveraging the significant complementarities that exist amongst the parties
- Further it is said that the models have been tested and refined over the years at scale and HDFC Bank will benefit from such expertise in underwriting and financing of mortgage offerings.
Now, HDFC Bank has access to funds at lower costs due to its high level of current and savings accounts deposits (CASA). With the amalgamation of HDFC with HDFC Bank, HDFC Bank will be able to offer more competitive housing products.