Termed as the largest transaction in India’s company historical past, HDFC Bank on April 2022 agreed to take over the largest home mortgage lender in a deal valued at about USD 40 billion, making a monetary companies titan. (Representative picture)
It is predicted that the guardian HDFC Ltd would merge into subsidiary HDFC Bank by the third quarter of the following monetary yr.
Mortgage lender HDFC Ltd on Monday mentioned its board has authorized elevating funds by way of non-convertible debentures (NCDs) in tranches aggregating to Rs 57,000 crore.
The board has cleared issuance of unsecured, redeemable, non-convertible debentures beneath a Shelf Placement Memorandum, aggregating Rs 57,000 crore, in varied tranches, on a personal placement foundation, HDFC mentioned in a regulatory submitting.
This is in accordance with the approval granted by the shareholders of the HDFC on the forty fifth annual basic assembly held on June 30, 2022, it mentioned.
Besides, it mentioned, “the board has authorized improve within the general borrowing powers of the company from Rs 6 lakh crore to Rs 6.50 lakh crore, excellent at any level of time and advisable the identical for approval of the members of the company by means of postal poll.” The decision was taken since the outstanding borrowings of HDFC as on date is approximately Rs 5.70 lakh crore and it would need to borrow further for its business purposes till the effective date of merger.
It is expected that the parent HDFC Ltd would merge into subsidiary HDFC Bank by the third quarter of the next financial year.
Termed as the biggest transaction in India’s corporate history, HDFC Bank on April 2022 agreed to take over the biggest domestic mortgage lender in a deal valued at about USD 40 billion, creating a financial services titan.
The proposed entity will have a combined asset base of around Rs 18 lakh crore. The merger is expected to be completed by the second or third quarter of FY24, subject to regulatory approvals.
Once the deal is effective, HDFC Bank will be 100 per cent owned by public shareholders, and existing shareholders of HDFC will own 41 per cent of the bank. Every HDFC shareholder will get 42 shares of HDFC Bank for every 25 shares held.
Following the merger, the combined balance sheet will be Rs 17.87 lakh crore and the net worth will be Rs 3.3 lakh crore, as of the December 2021 balance sheet. As of April 1, 2022, the market capitalisation of HDFC Bank was Rs 8.36 lakh crore (USD 110 billion) and that of HDFC Rs 4.46 lakh crore (USD 59 billion).
Post-merger HDFC Bank will be twice the size of ICICI Bank, which is the third-largest lender now.
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