HDFC To Merge into HDFC Bank

HDFC Limited, India's largest housing finance company with a total AUM of INR 5.26 Tn and a market cap of Rs 4.44 Tn will merge into HDFC Bank, India's largest private sector bank by assets with market cap of Rs 8.35 Tn.

Shareholders of HDFC Limited as on record date will receive 42 shares of HDFC Bank (FV Re. 1/- each) for 25 shares of HDFC Limited (FV Rs. 2/-each).

HDFC Limited's shareholding in HDFC Bank will be extinguished as per the scheme of amalgamation ("Scheme") upon the Scheme becoming effective. Post the above, HDFC Bank will be 100% owned by public shareholders and existing shareholders of HDFC Limited will own 41% of HDFC Bank.

Transaction completion is subject to shareholders, creditors and regulatory approvals including from RBI, IRDAI, CCI, SEBI and Stock Exchange.

The shares of HDFC and HDFC Bank, both surged following the announcement. HDFC Bank shares were up 10%, while HDFC shares were up 13%.

"A combination of the Corporation and HDFC Bank is entirely complementary to, and enhances the value proposition of HDFC Bank", HDFC said in a regulatory filing. "HDFC Bank would benefit from a larger balance sheet and networth which would allow underwriting of larger ticket loans and also enable a greater flow of credit into the Indian economy."