HDFC Limited to merge with HDFC Bank

HDFC Limited to merge with HDFC Bank 

  • Mortgage lender HDFC Limited and its banking arm, HDFC Bank have announced merger, making it the biggest merger in the Indian corporate history.
  • HDFC Ltd with total assets under management of Rs 5.26 lakh crore and a market cap of Rs 4.85 lakh crore will get merged with HDFC Bank having a market cap of Rs 9.17 lakh crore. 
  • The merger will take around 12 to 18 months to come into effect as the proposal needs to be approved by a number of regulators. 
  • The combined balance sheet of merged entity will be Rs 17.87 lakh crore and a net worth of Rs 3.3 lakh crore.
  • The market-cap of the merged entity will be approx Rs 14 lakh crore (twice the size of ICICI Bank), making it India’s second-biggest entity in terms of market capitalisation, after Reliance Industries Ltd (Rs 18.01 lakh crore).

Key Points to Remember from merger:

  • Post merger, HDFC Bank will be 100 percent owned by public shareholders.
  • HDFC Ltd will no more have shareholding in HDFC Bank.
  • Existing shareholders of HDFC Limited will own 41% of HDFC Bank.
  • These shareholders will receive 42 shares of HDFC Bank for 25 shares of HDFC Limited.
  • The subsidiary or associates of HDFC Limited will also be transferred to HDFC Bank.
  • Currently HDFC Ltd, along with two of its wholly-owned subsidiaries (HDFC Investments Ltd and HDFC Holdings Ltd), holds 21 percent of the paid-up equity share capital of HDFC Bank.

Points to Remember:

  1. What shall be the approx market-cap of the merged HDFC-HDFC Bank entity? 14 lakh cr
  2. The merged entity will become India’s ________ largest entity in terms of market-cap
  3. The merged entity will surpass which company to become second largest company? TCS

Source: Times of India

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