HDFC to be merged with HDFC Bank; here's everything you need to know

Housing Development Finance Corporation (HDFC) announced on April 4 that its board of directors has authorised the merger of its fully owned subsidiaries HDFC Investments Limited and HDFC Holdings Limited with HDFC Bank Limited. According to an HDFC Bank filing with the stock markets, the transformative merger will result in HDFC acquiring a 41 percent interest in HDFC Bank.

The HDFC-HDFC Bank merger is scheduled to close in the second or third quarter of FY24. According to HDFC, the Proposed Transaction would allow HDFC Bank to expand its home loan portfolio and expand its existing client base. When the Scheme goes into effect, HDFC Bank would be held entirely by public shareholders, with existing HDFC Limited shareholders owning 41% of the company.

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For the merger of HDFC Limited with and into HDFC Bank, the share exchange ratio shall be 42 equity shares (credited as fully paid up) of HDFC Bank of face value of Re 1 each for every 25 fully paid-up equity shares of face value of 2 of HDFC Limited. The subsidiaries and associates of HDFC Ltd will shift to HDFC Bank.

"The Boards of Directors of HDFC Limited and HDFC Bank believe that the combination would produce long-term value for all stakeholders, including both businesses' customers, workers, and shareholders. The merger of the two businesses would lend further momentum to the Government's aim of "Housing for All," HDFC stated in an exchange filing.

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