India’s HDFC Bank merging with housing company HDFC

Post completion, HDFC Bank will be owned 100% by public shareholders.

India’s largest private sector bank, HDFC Bank, is merging with HDFC Limited, the country’s largest housing finance company.

Upon completion, HDFC Bank will be 100% owned by public shareholders and existing shareholders of HDFC Limited will own 41% of HDFC Bank, according to the press announcement. Shareholders of HDFC Limited will receive 42 HDFC Bank shares for every 25 shares held, whilst equity shares held by HDFC Limited in HDFC Bank will be extinguished.

The resulting entity will reportedly have a combined balance sheet worth $237b, according to a report by Reuters.

HDFC Bank expects the merger to strengthen its housing finance business.

“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,” said Shri. Deepak Parekh, chairman HDFC Limited.

Post-merger, HDFC Bank’s customers will be offered mortgages as a core product in a seamless manner. HDFC Bank will also leverage the long tenor mortgage relationship to offer varied credit and deposit products enabled through better insights throughout the customer life-cycle.

“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,” the chairman added.