Outcome of Board Meeting - April 4, 2022
Source: RNS
Ref. No.: SE/2022-23/6
April 4, 2022
BSE Limited National Stock Exchange of India Limited
P. J. Towers Exchange Plaza, Plot No. C/1, G Block
Dalal Street Bandra-Kurla Complex
Mumbai 400 001 Bandra (East), Mumbai 400 051
Kind Attn: Sr. General Manager Kind Attn: Head - Listing
DCS - Listing Department
Dear Sirs,
Sub: Disclosure under Regulation 30 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations") - Outcome of Board Meeting
We wish to inform you that the Board of Directors of Housing Development Finance Corporation Limited ("Corporation") at its meeting held today i.e. April 4, 2022, after considering the respective recommendations and reports of the Audit and Governance Committee of Directors of the Corporation and the Committee of Independent Directors of the Corporation, has inter alia approved a composite scheme of amalgamation ("Scheme") for the amalgamation of: (i) HDFC Investments Limited and HDFC Holdings Limited, wholly-owned subsidiaries of the Corporation, with and into the Corporation and (ii) the Corporation with and into HDFC Bank Limited ("HDFC Bank"), and their respective shareholders and creditors, under Sections 230 to 232 of the Companies Act, 2013, the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 and other rules and regulations framed thereunder ("Proposed Transaction").
The Scheme is subject to the receipt of requisite approvals from the Reserve Bank of India ("RBI"), Securities and Exchange Board of India ("SEBI"), the Competition Commission of India, the National Housing Bank ("NHB"), the Insurance and Regulatory and Development Authority, the Pension Fund Regulatory and Development Authority, the National Company Law Tribunal, BSE Limited and the National Stock Exchange of India Limited (collectively, the "Stock Exchanges") and other statutory and regulatory authorities, and the respective shareholders and creditors.
The share exchange ratio for the amalgamation of the Corporation with and into HDFC Bank shall be 42 equity shares (credited as fully paid up) of face value of Re. 1 (Rupee One) each of HDFC Bank for every 25 fully paid up equity shares of face value of Rs. 2 (Rupees Two) each of the Corporation.
The Board of Directors of the Corporation has also approved the execution of an implementation agreement between the Corporation and HDFC Bank ("Implementation Agreement"), which inter alia sets out the manner of effecting the Proposed Transaction contemplated under the Scheme, the representations and warranties being given by each party and the rights and obligations of the respective parties in relation to the Proposed Transaction.
As per the Scheme, the appointed date for amalgamation of HDFC Investments Limited and HDFC Holdings Limited with and into the Corporation shall be the end of the day immediately preceding the effective date of the Scheme. Further, the appointed date for the amalgamation of the Corporation with and into HDFC Bank shall be the effective date of the Scheme.
The information in connection with the Proposed Transaction and the Implementation Agreement pursuant to Regulation 30 of the Listing Regulations read with SEBI circular dated September 9, 2015, bearing reference no. CIR/CFD/ CMD/4/2015, are given in Annexure I and Annexure II, respectively.
A press release being issued by the Corporation, is enclosed and marked as Annexure III.
The above-referred meeting of the Board of Directors of the Corporation commenced at 7:30 a.m. and concluded at 8:30 a.m.
Thank you,
Yours faithfully,
For Housing Development Finance Corporation Limited
Ajay Agarwal
Company Secretary
Encl: a/a.
http://www.rns-pdf.londonstockexchange.com/rns/1071H_1-2022-4-4.pdf
http://www.rns-pdf.londonstockexchange.com/rns/1071H_2-2022-4-4.pdf
CC: London Stock Exchange
10, Paternoster Square, London, EC4M 7LS
Annexure I
Amalgamation/ Merger:
|
Sr No. |
Details of event that needs to be provided |
Information of such event |
|
a) |
Name of the entity(ies) forming part of the amalgamation/merger, details in brief such as, size, turnover etc.;
|
The Corporation has total assets of ` 6,23,420.03 crore, turnover ` 35,681.74 crore and net worth of ` 1,15,400.48 crore as on December 31, 2021.
HDFC Bank has total assets ` 19,38,285.95 crore, turnover of ` 1,16,177.23 crore (includes other income) and net worth of ` 2,23,394.00 crore, as on December 31, 2021.
HDFC Investments Limited has total assets of ` 341.37 crore, turnover ` 200.11 crore and net worth of ` 292.41 crore as on December 31, 2021.
HDFC Holdings Limited has total assets of ` 244.43 crore turnover ` 20.88 crore and net worth of ` 241.80 crore as on December 31, 2021.
|
|
b) |
Whether the transaction would fall within related party transactions? If yes, whether the same is done at "arm's length";
|
HDFC Investments Limited and HDFC Holdings Limited are wholly-owned subsidiaries of the Corporation.
HDFC Bank is an associate company of the Corporation.
The Proposed Transaction is on arm's length basis. The share exchange ratio has been determined based on joint valuation report issued by the independent valuers, supported by a fairness opinion by a SEBI registered merchant banker.
|
|
c) |
Area of business of the entity(ies);
|
The Corporation is a deposit taking housing finance company registered with the NHB and its shares are listed on the Stock Exchanges.
HDFC Bank is a banking company licensed by the RBI under the provisions of the Banking Regulation Act, 1949. Its shares and American Depositary Receipts are listed on the Stock Exchanges and New York Stock Exchange respectively.
HDFC Investments Limited and HDFC Holdings Limited are non-deposit accepting non-banking finance companies, registered with RBI, engaged in the business of investments in stocks, shares, debentures and other securities. Both are unlisted companies.
|
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d) |
Rationale for amalgamation/ merger
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(a) The Proposed Transaction shall enable HDFC Bank to build its housing loan portfolio and enhance its existing customer base.
(b) The Proposed Transaction is based on leveraging the significant complementarities that exist amongst the Parties. The Proposed Transaction would create meaningful value for various stakeholders including respective shareholders, customers, employees, as the combined business would benefit from increased scale, comprehensive product offering, balance sheet resiliency and the ability to drive synergies across revenue opportunities, operating efficiencies and underwriting efficiencies, amongst others.
(c) HDFC Bank is a private sector bank and has a large base of over 6.8 crore customers. The bank platform will provide a well-diversified low cost funding base for growing the long tenor loan book acquired by HDFC Bank pursuant to the Proposed Transaction.
(d) HDFC Bank is a banking company with a large distribution network that offers product offerings in the retail and wholesale segments. The Corporation is a premier housing finance company in India and provides housing loans to individuals as well as loans to corporates, undertakes lease rental discounting and construction finance apart from being a financial conglomerate. A combination of the Corporation and HDFC Bank is entirely complementary to, and enhances the value proposition of HDFC Bank.
(e) HDFC Bank would benefit from a larger balance sheet and networth which would allow underwriting of larger ticket loans and also enable a greater flow of credit into the Indian economy.
(f) The Corporation has invested capital and developed skills and has set up 445 offices across the country. These offices can be used to sell the entire product suite of both the Corporation and HDFC Bank;
(g) The loan book of the Corporation is diversified having cumulatively financed over 90 lakh dwelling units. With the Corporation's leadership in the home loan arena, developed over the past 45 years, HDFC Bank would be able to provide to customers flexible mortgage offerings in a cost-effective and efficient manner.
(h) HDFC Bank has access to funds at lower costs due to its high level of current and savings accounts deposits (CASA). With the amalgamation of the Corporation with HDFC Bank, HDFC Bank will be able to offer more competitive housing products;
(i) The Corporation's rural housing network and affordable housing lending is likely to qualify for HDFC Bank as priority sector lending and will also enable a higher flow of credit into priority sector lending, including agriculture.
(j) The Proposed Transaction will result in reducing HDFC Bank's proportion of exposure to unsecured loans.
(k) The Corporation has built technological capabilities to evaluate the credit worthiness of customers using analytical models, and has developed unique skills in financing various customer segments. The models have been tested and refined over the years at scale and HDFC Bank will benefit from such expertise in underwriting and financing of mortgage offerings.
(l) HDFC Bank can leverage on the loan management system, comprising rule engines, IT tools and rules, agents connected through a central system.
(m) The Proposed Transaction is expected to result in bolstering the capital base and bringing in resiliency in the balance sheet of HDFC Bank.
(n) HDFC Investments Limited and HDFC Holdings Limited are Systemically Important Non - Deposit Accepting Non - Banking Finance Companies and are also wholly owned subsidiaries of the Corporation. The Proposed Transaction shall result in simplified corporate structure.
|
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e) |
In case of cash consideration - amount or otherwise share exchange ratio
|
No consideration shall be payable pursuant to the amalgamation of HDFC Investments Limited and HDFC Holdings Limited with and into the Corporation. The equity shares held by the Corporation and its nominees in HDFC Investments Limited and HDFC Holdings Limited, shall stand cancelled.
In case of the amalgamation of the Corporation into and with HDFC Bank, the share exchange ratio shall be 42 equity shares (credited as fully paid up) of face value of
|
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f) |
Brief details of change in shareholding pattern (if any) of listed entity
|
Upon the Scheme becoming effective, HDFC Bank will issue equity shares (in the share exchange ratio as mentioned above) to the shareholders of the Corporation as on the record date. The equity shares held by the Corporation in HDFC Bank will be extinguished as per the Scheme.
|
Annexure II
Agreements (viz. shareholder agreement(s), joint venture agreement(s), family settlement agreement(s) (to the extent that it impacts management and control of the listed entity), agreement(s)/treaty(ies)/contract(s) with media companies) which are binding and not in normal course of business, revision(s) or amendment(s) and termination(s) thereof:
|
Sr No. |
Details of event that needs to be provided |
Information of such event |
|
a) |
Name(s) of parties with whom the agreement is entered
|
Implementation Agreement between the Corporation and HDFC Bank.
|
|
b) |
Purpose of entering into the agreement
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The Implementation Agreement inter alia sets out the manner of effecting the Proposed Transaction contemplated under the Scheme, the representations and warranties being given by each party and the rights and obligations of the respective parties.
|
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c) |
Shareholding, if any, in the entity with whom the agreement is executed
|
As on date, the Corporation, along with two of its wholly-owned subsidiaries, holds 21% of paid-up equity share capital of HDFC Bank. |
|
d) |
Significant terms of the agreement (in brief) special rights like right to appoint directors, first right to share subscription in case of issuance of shares, right to restrict any change in capital structure etc.
|
The Implementation Agreement inter alia sets out the manner of effecting the Proposed Transaction contemplated under the Scheme, the representations and warranties being given by each party and the rights and obligations of the respective parties. |
|
e) |
Whether, the said parties are related to promoter/promoter group/ group companies in any manner. If yes, nature of relationship
|
The Corporation is promoter of HDFC Bank. |
|
f) |
Whether the transaction would fall within related party transactions? If yes, whether the same is done at "arms length";
|
HDFC Bank is an associate company of the Corporation.
The Implementation Agreement is for the purpose of effecting the Proposed Transaction which is at arm's length basis.
|
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g) |
in case of issuance of shares to the parties, details of issue price, class of shares issued;
|
Not applicable |
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h) |
any other disclosures related to such agreements, viz., details of nominee on the board of directors of the listed entity, potential conflict of interest arising out of such agreements, etc.; |
None |
|
i) |
in case of termination or amendment of agreement, listed entity shall disclose additional details to the stock exchange(s): a) name of parties to the agreement; b) nature of the agreement; c) date of execution of the agreement; d) details of amendment and impact thereof or reasons of termination and impact thereof. |
Not applicable |
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