HDFC and HDFC Bank merger proposal gets nod from stock exchanges

The merger, which was announced in early April, requires a series of approvals from financial sector regulators including RBI and CCI before it goes to NCLT and shareholders

The proposal of merger of HDFC with its banking subsidiary HDFC Bank, the biggest transaction in India's corporate history, has got approval from stock exchanges.

Both HDFC and HDFC Bank have got no-objection from both stock exchanges.

HDFC Bank has received observation letter with 'no adverse observations' from BSE Limited and observation letter with 'no objection' from the National Stock Exchange of India Limited, both dated July 2, 2022, HDFC Bank said in a filing.

"The scheme remains subject to various statutory and regulatory approvals inter alia including approvals from the Reserve Bank of India, Competition Commission of India, the National Company Law Tribunal and the respective shareholders and creditors of the companies involved in the scheme, as may be required," it said.

Earlier on April 4, India's largest private lender HDFC Bank agreed to take over the biggest domestic mortgage lender in a deal valued at about USD 40 billion, creating a financial services titan.

The proposed entity will have a combined asset base of around Rs 18 lakh crore. The merger is expected to be completed by the second or third quarter of FY24, subject to regulatory approvals.

Once the deal is effective, HDFC Bank will be 100 per cent owned by public shareholders, and existing shareholders of HDFC will own 41 per cent of the bank.

Every HDFC shareholder will get 42 shares of HDFC Bank for every 25 shares held.

The observation letter by the BSE said, the company is advised to disclose the details of all the actions taken by Sebi or any other regulator against any of the entities, its directors/promoters and promoter group, in the petition to be filed before NCLT.

The company shall ensure that no changes to the draft scheme except those mandated by the regulators or tribunals should be made without specific written consent of Sebi, it said.

Amalgamated company is advised that the proposed equity shares issued in terms of the scheme should mandatorily be in dematerialised form only, it said.

Following the merger the combined balance sheet will be Rs 17.87 lakh crore and the net worth will be Rs 3.3 lakh crore, as of December 2021 balance sheet.

As of April 1, 2022, the market capitalisation of HDFC Bank was Rs 8.36 lakh crore (USD 110 billion) and that of HDFC Rs 4.46 lakh crore (USD 59 billion).

Post-merger HDFC Bank will be twice the size of ICICI Bank, which is the third-largest bank now.