The tie up between HDFC Bank Ltd. and Housing Development Finance Corporation, would rank this Indian bank fourth in the global ranking system. Until now, the largest American and Chinese lenders had occupied the ranks of the ‘World’s Most Valuable Banks’.
The completion of this merger is tentatively set in July 2023, and with this merger it is estimated that the accumulated Market Capitalization of HDFC Ltd and HDFC Bank Ltd would surpass that of the 4 private banks and 13 government owned banks which stands at INR 14.3 trillion and INR 9.77 trillion respectively. To compare, HDFC Ltd. alone has a market value of INR 5.19 trillion and HDFC Bank Ltd. has market value of INR 9.47 trillion. The total value of the merged entity is about $172 billion.
The tie up between HDFC Bank Ltd. and its parent HDFC is expected to be at a valuation of INR 14.7 trillion with a total of 120 million customers, branch network to over 8,300 and a total headcount of 1,77,000+ employees.
The Merged entity is expected to grow at 18% to 20% with an exceptional visibility in earnings growth and plans to double their brand presence in the next 4-5 years. By way of this merger, the parent’s home loan business would be added to the Bank’s portfolio, which was limited due to continuous referrals to the parent. Through this strategy, an entry into the lucrative housing finance market would permit the merged entity to have a home loan book of INR 7.3 lakh crore.
The share swap would be at a ratio of 42:25 i.e., shareholders in HDFC will receive 42 shares of the bank for every 25 shares held, giving them ownership of 41% in the lender.
The merger has already been approved by the concerned governmental authorities like Reserve Bank of India (RBI), National Company Law Tribunal (NCLT), Pension Fund Regulatory and Development Authority (PFRDA), Securities and Exchange Board of India (SEBI), the Competition Commission of India and Indian Stock Exchanges i.e., Bombay Stock Exchange (BSE) & National Stock Exchange (NSE).
This merger unleashed the true value of both the entities and brought forward a stronger valuation as a merged entity. We at Indcap, can assist you by unleashing your potential value with our wide range of professional customised solutions.
