The boards of Housing Development Finance Corp and HDFC Bank on Friday approved July 1 as the effective date of the two financial behemoths' $40 billion merger, the largest in India's corporate history.
According to Bloomberg, with a valuation of $172 billion, the merger will place HDFC in the fourth position in equity market capitalisation behind JP Morgan Chase & Co., Industrial and Commercial Bank of China Ltd. and Bank of America Corp.
Both the companies have set July 13 as the "record date" to swap HDFC's shares with HDFC Bank's stock for its shareholders, HDFC and HDFC Bank said in separate exchange filings on Friday.
As per the deal announced in April last year, shareholders of HDFC will receive 42 shares of HDFC Bank for every 25 shares held, giving them ownership of 41% in the lender.
With the share swap, HDFC Bank will become one of the world's top 10 banks in terms of market capitalisation, as per Refinitiv data.
HDFC Bank's shares have gained about 13% so far since the merger was announced, while the broader Nifty 50 index has risen over 8%.
After the merger, HDFC Bank has no identified promoter. HDFC Bank CEO Sashidhar Jagdishan will head the combined company, while HDFC's Keki Mistry and Renu Sud Karnad will be on the bank's board.
With the merger, HDFC Bank's total loan book will be over 22 trillion rupees, behind only that of State Bank of India, the country’s largest lender.
HDFC Bank will keep home loans at the centre of its growth strategy after the merger, with such credit likely to make up nearly a third of the lender's portfolio, two senior officials at the group had told Reuters in June.
The merger is also set to shake up the debt fundraising market for non-bank financiers in India, as the exit of a large borrower will leave investors searching for other options.
Both the entities have set July 12 as a record date for transfer of non-convertible debentures of HDFC in the name of HDFC Bank.