HDFC-HDFC Bank merger gets PFRDA approval

After Indian bourses, BSE and NSE and the Reserve Bank of India gave their approval for the proposed merger of HDFC with its banking subsidiary HDFC Bank, the Pension Fund Regulatory and Development Authority (PFRDA) also gave nod to the deal, deemed to become the biggest transaction in India's corporate history.

In a regulatory filing released on Friday, Housing Development Finance Corporation Ltd. (HDFC) announced receiving PFRDA’s approval. The merger is in accordance with the decisions taken by the Board of Directors of HDFC Limited. 

“We wish to inform you that HDFC Limited has today i.e. on July 8, 2022, received an approval from PFRDA regarding change in its status/ constitution pursuant to the Scheme in accordance with the PFRDA Regulations, 2018, subject to a condition that the services to NPS subscribers associated with HDFC Limited will not be affected due to the Scheme,” the company informed the exchanges.

The company also added, “The Scheme remains subject to various statutory and regulatory approvals inter alia including approvals from the Competition Commission of India, the National Company Law Tribunal and the respective shareholders and creditors of the companies involved in the Scheme as may be required.”

Earlier on April 4, India's largest private lender HDFC Bank agreed to take over the biggest domestic mortgage lender, HDFC Ltd, in a deal valued at about $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.

The observation letter by the BSE said, the company is advised to disclose the details of all the actions taken by Sebi or any other regulator against any of the entities, its directors/promoters and promoter group, in the petition to be filed before NCLT.

The company shall ensure that no changes to the draft scheme except those mandated by the regulators or tribunals should be made without specific written consent of Sebi, it said.

Amalgamated company is advised that the proposed equity shares issued in terms of the scheme should mandatorily be in dematerialised form only, it said.

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 December 2021 balance sheet.

As of April 1, 2022, the market capitalisation of HDFC Bank was Rs 8.36 lakh crore ($110 billion) and that of HDFC Rs 4.46 lakh crore ( $59 billion).

Post-merger HDFC Bank will be twice the size of ICICI Bank, which is the third-largest bank now.

(With inputs from agencies)

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