HDFC, a major housing finance company, will merge with its subsidiary HDFC Bank. The boards of both companies have approved the merger. As a result, HDFC Ltd, which is 44 years old and the first home finance company in the country, will no longer exist from July 1. The merger is considered the biggest transaction in India’s corporate history, creating a financial services giant with combined assets of over ₹18 lakh crore.
Here are the key points about the HDFC Bank merger with its parent company, HDFC:
- The merger between HDFC Bank and HDFC is considered the largest transaction in the history of India Inc.
- After the merger, HDFC Bank will become one of the world’s most valuable banks, challenging the top American and Chinese lenders.
- The all-stock deal between HDFC Bank and HDFC is valued at $40 billion, creating a financial services titan with combined assets of over ₹18 lakh crore.
- The new HDFC Bank entity will have a massive customer base of around 120 million, surpassing the population of Germany. It will also expand its branch network to over 8,300 and have more than 177,000 employees.
- The merged entity will be the fourth-largest in terms of equity market capitalization, following JPMorgan Chase & Co., Industrial and Commercial Bank of China Ltd., and Bank of America Corp. Its valuation is approximately $172 billion.
- The combined business of HDFC Bank and HDFC reached ₹41 lakh crore by the end of March 2023. The net worth of the merged entity will exceed ₹4.14 lakh crore. The combined profit of both entities was around ₹60,000 crore.
- The shares of the merged HDFC entities will have a significant impact on indices, accounting for close to 14% of the weighting. This surpasses Reliance Industries, which currently holds a weightage of 10.4%.
- Following the merger, HDFC Bank’s market capitalization will exceed that of HSBC Holdings Plc and Citigroup Inc. It will also surpass its Indian counterparts, the State Bank of India and ICICI Bank.
- The merger transforms HDFC Bank into a financial services conglomerate, offering a comprehensive range of services, including banking, insurance, and mutual funds through its subsidiaries.
- With the merger, HDFC Bank will have the capability to provide its customers with in-house home loan products, as only a small percentage of them had a mortgage product from HDFC Ltd. previously.
- Key subsidiaries of HDFC Bank post-merger include HDFC Securities Ltd, HDB Financial Services Ltd, HDFC Asset Management Co Ltd, HDFC ERGO General Insurance Co Ltd, HDFC Capital Advisors Ltd, and HDFC Life Insurance Co Ltd.