HDFC’s reverse merger with its subsidiary HDFC Bank came into effect on Saturday, increasing the combined entity’s total business to over Rs 4,100 crore
Release date – Sunday, July 23 at 12:30
New Delhi: The reverse merger of HDFC with its subsidiary HDFC Bank came into effect on Saturday, increasing the combined entity’s total business to more than Rs 4,100 crore, close to the country’s largest bank, SBI.
State Bank of India’s (SBI) total business (deposits and advances) as on March 31, 2023 was Rs 7,030 crore.
However, the consolidated profit was Rs 60,000 crore, higher than SBI’s FY2023 profit of Rs 5,023.2 crore.
After the merger, HDFC Bank became the fourth most valuable bank in the world and narrowed the asset size gap with state-owned SBI to become India’s second largest bank.
As of March 2023, the combined entity’s total business will be Rs 41 billion. Post-merger, the entity will have a net worth of over Rs 4.14 billion.
After the merger, the capital of HDFC Bank increased to Rs 1,190.61 crore with the right to increase or decrease the share capital.
HDFC Bank said in a regulatory filing that HDFC Investments and HDFC Holdings have been merged with HDFC Limited and have been dissolved on July 1, 2023, outstanding and without any further action or deed.
It added that HDFC Limited has been merged with HDFC Bank and that HDFC Limited has been dissolved on July 1, 2023 and is not in liquidation without any further action or conduct, with effect from Saturday.
After the transaction becomes effective, HDFC Bank will be 100% owned by public shareholders and HDFC’s existing shareholders will hold 41% of the bank’s shares. Each HDFC shareholder will receive 42 HDFC Bank shares for every 25 shares held.
After consultation with the HDFC Limited board of directors, the board of directors of HDFC Bank has decided to determine the shareholders of HDFC Ltd who will issue and allot HDFC Bank shares on July 13, 2023.
In addition, the warrants of HDFC Limited have been scheduled to continue on July 13 in the name of HDFC Bank.
The board of directors has fixed the transfer date of July 12, 2023 for the non-convertible bonds and July 7 for the HDFC Ltd commercial paper in the name of HDFC Bank.
The combined entity brings together the significant complementarities that exist between the two entities and is poised to provide benefits to various stakeholders, including both entities’ respective customers, employees and shareholders) to create meaningful value. Revenue opportunities, operational efficiencies and underwriting efficiencies.
HDFC Bank embarked on a rebranding exercise on the first day after the merger, adopting its own brand identity across all of HDFC Ltd.’s 500+ branches and offices.
HDFC’s corporate headquarters at Ramon House is now branded with HDFC Bank’s branding, and officials estimate the entire exercise will conclude within the next 24 hours.
It’s worth noting that since the merger was announced on April 4 last year, a dedicated team has been in place to make the merger as smooth as possible. HDFC Bank has pledged to absorb all of its parent company’s 4,000-plus employees as part of the largest $40 billion all-stock deal in Indian corporate history.
