HDFC Bank and HDFC rise up to 10% as board approves merger

Housing Development Company Limited (HDFC) and HDFC Bank surged as much as 10 per cent on the Bahrain Stock Exchange in trading on Monday after their board of directors approved the merger of HDFC into HDFC Bank.

As part of the deal, HDFC Ltd shareholders will receive 42 shares of the bank for 25 shares. The existing shareholders of HDFC Ltd will own 41 per cent of HDFC Bank. Reports are that the lender’s housing finance company’s equity will be amortized, making HDFC Bank a fully public company. Read about it here

The merger of HDFC, the largest housing finance company in India, with the largest private sector bank in India, HDFC Bank, will enable smooth delivery of mortgage loans and benefit from a large base of more than 68 million clients of HDFC Bank, among other things improving the pace of credit growth in Economy, HDFC Bank said in the exchange file.

Shares of HDFC and HDFC Bank rose 10 per cent to Rs 2,696 and Rs 1,656.90 on the Bahrain Stock Exchange in intraday trading. At 09:20 AM, HDFC trading was up 7 per cent at Rs 2,625 and HDFC Bank was up 6 per cent at Rs 1,598. By comparison, the S&P BSE Sensex was up 1.2 percent at 59,972.

“HDFC Bank’s Board of Directors, at its meeting today, on April 4, 2022, approved, among other things, a combination scheme for the merger of HDFC Investments Limited and HDFC Holdings Limited, with the Housing Development Finance Corporation Limited (“HDFC Limited”). ); and HDFC Limited at HDFC Bank,” the statement said.

HDFC Holdings Limited and HDFC Investments Limited are non-bank, deposit-taking finance companies, registered with the Reserve Bank of India (RBI), engaged in investments in stocks, shares, bonds and other securities. Both are unlisted companies.

The proposed transaction aims to create a large balance sheet and net worth that will allow a greater flow of credit into the economy. It will also enable big ticket loans, including infrastructure loans, to be underwritten, an urgent need for the country.

HDFC is an important provider of housing loans for Low Income Group (LIG) and Middle Income Group (MIG) under the Affordable Housing Initiatives of the Government of India. The company said that access to housing finance for this category will be further improved at the expense of the low-cost funds available with HDFC Bank.

The statement stated that the housing loan market is on the cusp of a strong upward cycle, with all-time high favorable industry dynamics and a stable secured asset class with highly attractive risk-adjusted returns.

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