HDFC, HDFC Bank boards approve July 1 as effective date of mega merger, July 13 set as record date

Private lender HDFC Bank Ltd” href=”https://www.businesstoday.in/stocks/hdfc-bank-ltd-hdfcbank-share-price-362936″ target=”_blank”>HDFC Bank Ltd on Friday announced that the mega merger with mortgage lender Housing Development Finance Corporation Ltd has been completed after the final approval from the respective boards.

Boards of HDFC Ltd and HDFC Bank gave their final approval for merger and effective date has been fixed for July 1 and record date has been fixed for July 13, said the private lender.

“The board of directors of HDFC Bank at its meeting held today approved Saturday, July 1, 2023, to be the ‘Effective Date’ of the Scheme, on which date the certified order of the NCLT sanctioning the Scheme will be filed by HDFC Investments, HDFC Holdings, HDFC Limited and HDFC Bank with the RoC,” said HDFC Bank in a stock exchange filing.

July 12 has been fixed as the date for transfer of non-convertible debentures of HDFC Limited in the name of HDFC Bank.

Termed as the biggest transaction in the history of India Inc, HDFC Bank on April 4, 2022, agreed to take over its parent, which is the largest pure-play mortgage lender, in a $40-billion all-stock deal, creating a financial services titan with a combined asset of over Rs 18 lakh crore.

The combined shares of the HDFC twins will have the highest weighting on the indices at close to 14 per cent, much higher than the present index heavyweight Reliance Industries with a 10.4 per cent weightage.

Once the deal is effective, every HDFC shareholder will get 42 shares of HDFC Bank for every 25 shares they hold.

“The merged entity brings together significant complementarities that exists between both the entities and is poised to create meaningful value for various stakeholders, including respective customers, employees, and shareholders of both the entities from increased scale, comprehensive product offering, balance sheet resiliency and ability to drive synergies across revenue opportunities, operating efficiencies and underwriting efficiencies. Pursuant to the share exchange ratio as per the merger scheme, HDFC Bank will issue and allot to eligible shareholders 42 new equity shares of the face value of Re 1 each, credited as fully paid-up, for every 25 equity shares of the face value of Rs 2 each fully paid-up held by such shareholder in HDFC Ltd. as on the Record Date i.e., July 13, 2023,” said HDFC Bank in a statement.

Speaking on the completion of the merger, Sashi Jagdishan, CEO & MD, HDFC Bank said: “This is a defining event in our journey and I’m confident that our combined strength will enable us to create a holistic ecosystem of financial services. We’re truly happy to welcome the talented team of HDFC Ltd. into the HDFC Bank family. I believe our journey will be defined by agility, adaptability, and a relentless pursuit of excellence. As we navigate the path ahead, we will embrace challenges as opportunities, learn from our experiences, and strive to be the benchmark of success and integrity in the financial services industry.”

Post the merger, HDFC Bank has no identified promoter. It also marks the transformation of HDFC Bank into a financial services conglomerate that offers a full suite of financial services, from banking to insurance, and mutual funds through its subsidiaries. So far, the bank was a distributor for these products, the private lender said.

The merger of India’s largest housing finance company, HDFC Ltd, with the largest private sector bank in India combines the strengths of a trusted home loan brand with an institution that enjoys a lower cost of funds. The larger net-worth would allow greater flow of credit into the economy. It will also enable underwriting of larger ticket loans, including infrastructure loans and contribute further to nation building and employment generation.

All employees of HDFC Ltd. as on effective date become HDFC Bank employees. The combined entity will have 1.77 lakh employees. Over the past months, the Bank has been preparing for smooth integration not only of systems and processes, but also of all aspects that will make HDFC Bank a welcoming place of work for the employees from HDFC Ltd.

Post merger, the key HDFC Bank subsidiaries include HDFC Securities Ltd., HDB Financial Services Ltd., HDFC Asset Management Co. Ltd, HDFC ERGO General Insurance Co. Ltd., HDFC Capital Advisors Ltd. and HDFC Life Insurance Co. Ltd.

HDFC Bank also announced HDFC’s Keki Mistry and Renu Karnad as additional and non-executive (non-independent) directors of the bank.