HDFC Bank, India’s largest private lender, has finalized its merger with Housing Development Finance Corporation, the country’s largest mortgage lender, in a transaction that sets the new organization against the world’s greatest banks.
The merger was approved by shareholders and regulatory authorities, and it became official on July 1.
According to market capitalization, the combined company will rank after JPMorgan Chase, the Industrial and Commercial Bank of China, and Bank of America, according to Soumya Rajan, CEO and founder of Mumbai-based Waterfield Advisors.
Sashi Jagdishan, CEO of HDFC Bank, said on Friday, “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.”
On Saturday, the merger was finalized, some 15 months after the initial announcement of the agreement.
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 of last year.
According to Nilesh Shah, managing director of Kotak Mahindra Asset Management, the “common culture” shared by both businesses was a key factor in the merger’s successful completion.
On July 13, HDFC will cease trading on the Indian stock market and stockholders would get 42 HDFC Bank shares for every 25 HDFC shares they now possess.
According to Rajan, the market value of the new business is currently over $172 billion, making it the second most valuable company in India by market value, behind Reliance Industries.
“These two powerhouses coming together should make a material impact on growth and expanding the client base in the days to come,” Shah said.
So, for them, adding one to another should result in 11, not two or three. They must take use of these synergies to build an organization that is even more effective than the one that now exists, he added.