NEW DELHI, Apr 4: The Board of Directors of the HDFC Ltd. and HDFC Bank Ltd. at their respective meetings held on Monday approved a composite scheme for the amalgamation of the HDFC Investments Ltd. and HDFC Holdings Ltd. , with and into HDFC Ltd ; and HDFC Ltd with and into HDFC Bank, and their respective shareholders and creditors. The Scheme and the Proposed Transaction is subject to customary closing conditions.
The scheme is subject to the receipt of multiple approvals. Upon the scheme becoming effective, the subsidiaries/associates of HDFC Ltd. will become subsidiaries/associates of HDFC Bank. Shareholders of the HDFC Ltd as on the record date will receive 42 shares of the HDFC Bank (each of face value of ₹1), for 25 shares held in HDFC Ltd. (each of face value of ₹2), and the equity share(s) held by HDFC Ltd. in HDFC Bank will be extinguished as per the scheme.
As a result of this, upon the scheme becoming effective, the HDFC Bank will be 100% owned by public shareholders and existing shareholders of HDFC Ltd. will own 41% of HDFC Bank. Deepak Parekh, Chairman HDFC Ltd., said, “This is a merger of equals. We believe that the housing finance business is poised to grow in leaps and bounds due to the implementation of RERA, infrastructure status to the housing sector, government initiatives like affordable housing for all, amongst others. Over the last few years, various regulations for banks and NBFCs have been harmonised, thereby enabling the potential merger.
“ “Further, the resulting larger balance sheet would allow underwriting of large ticket infrastructure loans, accelerate the pace of credit growth in the economy, boost affordable housing and increase the quantum of credit to the priority sector, including credit to the agriculture sector,” he said.
Atanu Chakraborty, Chairman HDFC Bank, said, “The product and market leadership of HDFC Limited in the housing finance business and the distribution and customer leadership of HDFC Bank enables the combined entity to offer full suite of financial products to Indians at large and the proposed transaction is a big step in realising the vision of housing for all as envisioned by our government.” Keki M. Mistry, Vice-Chairman and CEO of HDFC Ltd., said “With the leadership that we have built in housing finance and the deep understanding of the housing market across various economic cycles, this transaction helps in realising the potential of what HDFC’s housing finance business can achieve by leveraging the distribution and customer base of HDFC Bank.
It is a step in the right direction, taken at the right time, for value creation for all the stakeholders.” Sashi Jagdishan, CEO & MD, HDFC Bank, said “The proposed transaction ticks all the right boxes in terms of completion of product offerings, product leadership in home loans as with other retail assets products, distribution strength across the country and a customer base that can be leveraged to cross-sell a complete suite of financial products. It is value accretive for all the stakeholders of both the organisations, including shareholders, employees and customers.”
