One the biggest development in the history of Indian private banking history, HDFC Bank on Saturday took over its parent company housing finance major HDFC. Termed as 'reverse merger' following HDFC-HDFC Bank merger, India's first home finance company, would cease to exist. Reports suggest that it will be the first time an Indian company or bank will be among the world's most valuable banks, marking a new challenger to the largest American and Chinese lenders occupying the coveted top spots. For the unversed, in April 2022, HDFC nodded to take over its parent company which is the largest mortgage lender in a $40-billion all-stock deal. With the HDFC-HDFC Bank finally merging, the question arises how will it impact the share market and its investors? To know the answer continue reading-
What was the market cap before the HDFC-HDFC merger?
As per reports, at the end of the trading session on Friday, HDFC Bank had a market cap of Rs 9,51,584 crore, while HDFC Ltd had a market cap of Rs 5,22,368.64 crore. Due to the merger, the market cap of HDFC will be Rs 14,73,953 crore. In this way, after Reliance Industries, HDFC Bank will become the second-largest company in the country by market cap. The market cap of Reliance Industries is Rs 17,25,704.60 crore. Talking about the investors and shareholders, after this merger, HDFC Limited will be completely owned by the public shareholders. Existing HDFC Limited shareholders will get 41 percent shares of HDFC Bank, as per reports. Shareholders will get 42 shares of HDFC Bank for every 25 shares held in HDFC Ltd.
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It is pertinent to mention here that after this merger, HDFC Securities, HDFC AMC, HDFC Agro GIC, HDFC Capital Advisors and HDFC Life Insurance will become subsidiaries of HDFC Bank. This affects the share price of the company. With the HDFC merger into effect, the Indian company will become the fourth-largest bank in the world. Now only JPMorgan Chase & Co, Industrial and Commercial Bank of China Ltd (ICBC), and Bank of America are bigger than HDFC Bank.
As per reports, the combined shares of the HDFC twins will have the highest weighting on the indices at close to 14 percent, much higher than the present index heavyweight Reliance Industries with a 10.4 percent weightage.