India’s largest private lender HDFC Bank has completed its merger with Housing Development Finance Corporation, India's biggest mortgage lender, in a deal that pits the new entity against the world’s largest banks. The merger was approved by shareholders and regulatory authorities and it became official on July 1. The merged entity will be the world’s fourth largest bank by market cap in the world - behind JPMorgan Chase, Industrial and Commercial Bank of China and Bank of America, said Soumya Rajan, CEO and founder of Mumbai-based Waterfield Advisors.
“This is a defining event in our journey and I’m confident that our combined strength will enable us to create a holistic ecosystem of financial services,” Sashi Jagdishan, CEO of HDFC Bank said.
“As we navigate the path ahead, we will embrace challenges as opportunities, learn from our experiences and strive to be the benchmark of success and integrity in the financial services industry,” he said in a press release.
After Reliance Industries, which has a market cap of $210 billion, the combined business will be the second most valuable in India. As part of the amalgamation process, HDFC Investments (HIL) and HDFC Holdings (HHL) first merge with their parent company HDFC, which then merged with HDFC Bank, effective on July 1. HDFC Bank will issue 42 equity shares (with a face value of Re 1 each) for every 25 equity shares (with a face value of Rs 2 each) held by HDFC shareholders as of the record date, which is July 13. The shares owned by HDFC, HIL and HHL in HDFC Bank will be cancelled according to the plan, and no dividend will be paid on them.
After being first announced roughly 15 months ago, the merger finally happened last week. The largest home loan provider in India, Housing Development Finance Corporation, was acquired by HDFC Bank in an all-stock deal valued at $40 billion in April last year.