Housing Development Finance to merge with HDFC Bank

Housing Development Finance Corp. Ltd. plans to merge itself and two other wholly owned subsidiaries with and into HDFC Bank Ltd.

Under the plan, Housing Development Finance will merge with HDFC Investments Ltd. and HDFC Holdings Ltd., and subsequently merge with HDFC Bank, according to an April 4 release.

The share exchange ratio for the amalgamation of Housing Development Finance with and into HDFC Bank will be 42 equity shares of the bank for every 25 fully paid up equity shares of Housing Development Finance.

Upon completion of the merger, the subsidiaries and associates of Housing Development Finance will become subsidiaries and associates of HDFC Bank. The bank will be wholly owned by public shareholders and existing shareholders of Housing Development Finance will own 41% of HDFC Bank.

The merger is subject to approval from India's central bank, statutory and regulatory authorities, as well as the respective shareholders and creditors. The move will enable HDFC Bank's customers to be offered mortgages as a core product, enabling the lender to build its housing loan portfolio and enhance its existing customer base.

Bank of America Merrill Lynch Securities, Credit Suisse, Kotak Securities, Jefferies, Arpwood, Motilal, Axis, JM Financial, IIFL and Ambit acted as financial advisers to Housing Development Finance, while Morgan Stanley India Co. Pvt. Ltd. J.P. Morgan, Goldman Sachs, Citi, Nomura CLSA, BNP, HSBC, ICICI Securities and Edelweiss were financial advisers to HDFC Bank.

As of April 1, US$1 was equivalent to 75.98 Indian rupees.