Mega-Merger of HDFC Twins Can Form One of the Biggest Banks in the World

8 August 2022
3 mins read
Mega-Merger of HDFC Twins Can Form One of the Biggest Banks in the World

One of the country’s largest private sector banks and top housing finance company has successfully brought their board members on board for an all-stock amalgamation on Monday, 4 April 2022. Thus, soon HDFC Bank Limited will be taking over HDFC Limited.

Stick to this piece to learn more about the mega-merger of these twins!

A Closer Look into the Transaction Made for HDFC Twins Merger

For a long time, HDFC has been planning this merger. Now, finally, after getting the all-stock amalgamation approval, it has sealed its transaction for $ 40 billion. HDFC and two of its subsidiaries currently own 21% of HDFC bank. After this merger, the shares of HDFC will be extinguished.

This HDFC twins merger includes two steps. In the first step, a merger of two wholly-owned subsidiaries of HDFC, i.e., HDFC Holdings Ltd. and HDFC Investments Ltd., will take place. Thereafter, HDFC Limited will be merged into HDFC Bank Limited.

This entire process must be completed in 15 to 18 months. Till then, both the companies will operate as two different entities.

Know About the Share Value Before and After Amalgamation

The amalgamation of Housing Development Finance Corporation Limited into HDFC Bank Limited involves a share exchange ratio of 42 shares of Re. 1 face value apiece for every 25 paid-up shares of the parent company at face value of Rs. 2 per share.

What Do Analysts Say About This Merger?

HDFC-HDFC Bank merger has a positive effect on the market as per the analysts. As a result, there is an increase of 9.3% in the stock price of HDFC Limited. At the same time, the stock price of HDFC Bank Limited has risen by 10%.

The experts also believe that requirements of this priority lending sector, including CRR & SLR requirements, will be a go on for its subsidiary after this twin merger.

Even Sashidhar Jagdishan, the Chief Executive Officer of HDFC Bank, strongly believes this acquisition will not affect flexibility.

Bottom Line

From the above information, it is clear that the HDFC twins merger will positively affect the company stock. In fact, as per the experts’ analysis, both entities have already experienced a rise in their stock, and they will further grow in the future.

So, after running comprehensive research on company valuation, vision and mission, if an investor plans to invest in HDFC, they can open their Demat account through the Angel One platform with minimum effort. The process is easy and saves time.

Frequently Asked Questions

What is the current market capitalisation of HDFC Bank? 

HDFC Bank’s market capitalization stands at $ 119.69 billion as of April 2022.

What does the Macquarie Research report say about SLR & CRR requirements?

According to this research report, the bank will have an excess asset requirement under SLR & CRR of Rs. 70,000 crores to Rs. 80,000 crores approximately. Apart from this, it will also need Rs. 90,000 crores for the agriculture portfolio.

From whom the company will have to get further approval to complete the merger process?

It will have to get approval from shareholders of HDFC Bank Limited, HDFC Limited, stock exchanges, Reserve Bank of India, and Securities and Exchange Board of India to complete its merger process.

Disclaimer: This blog is exclusively for educational purposes and does not provide any advice/tips on investment or recommend buying and selling any stock.