One of India biggest merger between HDFC Ltd & HDFC Bank
One of India biggest merger of happening between HDFC Ltd. and HDFC Bank. The boards of both the company on Monday cleared a $40 billion amalgamation of the parent housing finance company with the banking.
The shareholders of HDFC will get 42 shares of HDFC Bank for every 25 shares they hold. The earlier stake of 26% of HDFC over HDFC Bank will extinguish. Now, the HDFC Bank will be owned 100% by the public shareholders along with the existing shareholders of HDFC Ltd owning 41% of the stake. After 2007, this would be one of the largest Merger and Amalgamation in the banking sector across the globe.
This M&A would not only make the combination stronger but also open doors for making the mortgage more competitive.
The combination can become India’s second most valued company and 5th most valued lender globally.
The proposed combination will benefit the valuation as well as asset size helping the economy in many ways. A huge balance sheet with larger capital base will encourage greater flow of credit into the economy.
HDFC was incorporated in 1977, which was promoted by the institutions led by ICICI. HDFC Bank was promoted by HDFC in 1994 and was amongst the first Bank to receive the licence of private banks post 1991 reforms.
This Amalgamation will also give the opportunity to the foreign investors to invest in the securities of HDFC Bank. As well as increase the earning per share of the bank.
The merger of HDFC Bank as well as HDFC could create the second largest company in India by market capitalisation. Leaving behind Tata Consultancy Services (TCS), the crown jewel of the Tata group.
