Merger of HDFC Limited and HDFC Bank

Highlights:

• HDFC’s board of directors has approved the merger of HDFC Bank, India’s largest private sector bank with HDFC (Housing Development Finance Corporation), India’s largest housing finance firm.
• The deal will be building the housing loan portfolio of the bank and will also be enhancing its existing customer base.

• Under the agreement that has been proposed, public shareholders will be 100 % owning HDFC Bank, and HDFC Limited’s existing shareholders will own 41 % stake in HDFC Bank.
• As per the share exchange ratio, for every 25 equity shares that are held by the shareholders of HDFC, they will be receiving 42 equity shares of the combined company.
• After the announcement of the agreement, HDFC Bank shares rose by 14 %, and the share price of HDFC rose by more than 16 percent on BSE Sensex and NSE Nifty.
• The proposed agreement will be creating a large net worth as well as a balance sheet that would allow a greater credit flow into the economy. 
• Also, underwriting of larger ticket loans such as infrastructure loans will be enabled due to this agreement.
• This will be a two-part merger. In the first step, HDFC Holdings Limited and HDFC Investments Limited will be merging with HDFC Limited. 
• In the next step, HDFC Limited will be amalgamated with HDFC Bank. 
• After merging, the total assets of HDFC Bank and HDFC Ltd will be more than Rs 25 lakh crore. 
• The turnover of HDFC is Rs 35,681.74 crore while for HDFC Bank it is Rs 1.16 lakh crore..