REG - Housing Dev Fin Corp - Outcome of Board Meeting - April 4, 2022
04/04/2022 07:00
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RNS Number : 1071H Housing Development Fin. Corp. Ltd. 04 April 2022
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_1-2022-4-4.pdf)
http://www.rns-pdf.londonstockexchange.com/rns/1071H_2-2022-4-4.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/1071H_2-2022-4-4.pdf)
CC: London Stock Exchange
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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 The Corporation has total assets of ` 6,23,420.03 crore, turnover ` 35,681.74
brief such as, size, turnover etc.; 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, HDFC Investments Limited and HDFC Holdings Limited are wholly-owned
whether the same is done at "arm's length"; 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.
d) Rationale for amalgamation/ merger (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.
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
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.
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 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.
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 The Implementation Agreement inter alia sets out the manner of effecting the
appoint directors, first right to share subscription in case of issuance of Proposed Transaction contemplated under the Scheme, the representations and
shares, right to restrict any change in capital structure etc. 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 The Corporation is promoter of HDFC Bank.
companies in any manner. If yes, nature of relationship
f) Whether the transaction would fall within related party transactions? If yes, HDFC Bank is an associate company of the Corporation.
whether the same is done at "arms length";
The Implementation Agreement is for the purpose of effecting the Proposed
Transaction which is at arm's length basis.
g) in case of issuance of shares to the parties, details of issue price, class of Not applicable
shares issued;
h) any other disclosures related to such agreements, viz., details of nominee on None
the board of directors of the listed entity, potential conflict of interest
arising out of such agreements, etc.;
i) in case of termination or amendment of agreement, listed entity shall disclose Not applicable
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.
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