The Hindu Business Line : HDFC to maintain stake in merged entity

Mumbai, Feb. 25 Housing Development Finance Corporation (HDFC), the promoter company of HDFC Bank, will have to raise Rs 3,900 crore in order to maintain its stake at 23.28 per cent post the merger of the bank with the Centurion Bank of Punjab, said Mr Deepak Parekh, Chairman, HDFC.

HDFC’s stake will come down to 19 per cent post the merger.

“We will decide on the mode of raising the money in the next fortnight or within a month’s time,” said Mr Parekh. HDFC Bank would also consider making a preferential offer to HDFC to enable it to maintain its percentage shareholding in the merged entity.

The housing finance company’s total disbursal for the financial year 2007-08 stands at Rs 32,000 crore.

Though the officials refused to divulge details of fund raising, they said that it would not be difficult for the company to raise funds through internal accruals.

Mr Keki Mistry, Vice-hairman and Managing Director, HDFC, said, “With the kind of disbursements we have seen, it will not be difficult for us to raise Rs 3,000-4,000 crore. We can raise this money in the normal course through internal accruals.”

HDFC Bank has no plans to merge with its parent company, HDFC, at present.

The boards of HDFC Bank and Centurion Bank of Punjab agreed on in-principle merger between the two banks and approved a share-swap ratio of 1:29.

More mergers

Mr Rana Talwar, Chairman, Centurion Bank of Punjab, said, “The merger is a precursor to many more mergers and acquisitions and it will kick-off consolidation in the Indian financial sector.”

Indian banks have not been able to achieve global scale inspite of global quality in terms of banking practices, he said.

Consolidation will bring in the required scale of operations, said Mr Talwar.