Foreign Investmentmay Rise In Hdfc Bk

(This story originally appeared in on Apr 05, 2022)

Mumbai: The proposed HDFC Ltd and HDFC Bank amalgamation will involve HDFC Investments and HDFC Holdings merging with the parent mortgage company. Subsequently, HDFC will merge with its banking arm, resulting in all group companies becoming direct subsidiaries of HDFC Bank. Besides the bank, HDFC is the holding company for HDFC Life, HDFC General Insurance, HDFC Mutual Fund, HDFC Credila and HDFC Venture Capital.

“We have added 730 branches this year. With this announcement, we may ramp it up further because that not only helps us mobilise deposits but also to increase the distribution of affordable home loans. The moment we unleash that, you cannot stop the growth engine,” said Sashidhar Jagdishan, MD & CEO of HDFC Bank.

The amalgamation will give foreign investors more headroom to invest in HDFC Bank, where foreign holding was close to the limit. Extinguishing HDFC’s holding would also result in a considerable increase in the earning per share of the bank.

As a result of the mega merger announcement, shares of both HDFC and HDFC Bank rose on the stock exchange. Shares of HDFC closed 10% higher valuing the private lender at Rs 9.2 lakh crore while shares of the housing finance company rose 9.3% giving it a valuation of Rs 4.9 lakh crore.

There was speculation about a merger between the two entities for over two decades, particularly after ICICI merged with ICICI Bank in 2001. The HDFC merger was finalised less than 18 months after its founding CEO Aditya Puri retired with Jagdishan stepping into his shoes.