The merger of HDFC Corp with the country’s largest private lender HDFC Bank will likely take effect July 1, chairman of India’s mortgage-lending pioneer Deepak Parekh said Tuesday. The combined entity will have an asset base of around ₹18 lakh crore, or in excess of $200 billion.
The boards of HDFC and the private bank will meet on June 30 to clear and approve the merger, Parekh told the media in Mumbai. “The merger is expected to be complete by July 1. Both HDFC Bank and HDFC Ltd will have separate board meetings on June 30,” Parekh said.
Later in the evening, HDFC issued a clarification indicating that both the entities were still working toward completing all the necessary formalities.
The corporation referred to the press interaction with chairman Parekh on Tuesday wherein July 1 was referred to as the effective date of the scheme and July 13 for allotment of shares.
“Please note that the above dates are tentative and are subject to completion of certain formalities, including those beyond the control of HDFC or HDFC Bank,” said the mortgage lender’s note to the exchanges. “Once the board of directors of HDFC and HDFC Bank decide on the effective date of the scheme and the record date, (the decision) would be intimated to the stock exchanges in accordance with applicable regulations.”
HDFC vice-chairman and CEO Keki Mistry said that the stock delisting of the corporation will be effective from July 13. The merged HDFC Bank stock will start trading by July 17. “The idea is to minimise the period of time when HDFC shares don’t trade in the market,” Mistry said.
In the biggest merger in India’s corporate history announced last April, HDFC Bank agreed to take over HDFC in a deal valued at about $40 billion, creating a financial services titan.
“All assets and liabilities get grandfathered; so all depositors will get their rate of interest which we have committed until the tenor of the deposit,” Parekh told reporters.
He said that each branch will start selling mortgages.
“We hope that the housing portfolio will be higher as the branches of HDFC Bank will do more,” he said.
Once the deal is effective, HDFC Bank will be 100% owned by public shareholders, and existing shareholders of HDFC will own 41% of the bank. Every HDFC shareholder will get 42 shares of HDFC Bank for every 25 shares they hold.
