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HDFC-HDFC Bank merger to bring foreign inflows of up to $3 billion
April 18, 2023
India’s largest private-sector lender HDFC Bank and largest housing finance company HDFC are all set to merge by July this year and that is likely to result in foreign portfolio investors (FPI) inflows of up to $3 billion.
According to the shareholding data at the end of the March 2023 quarter, the foreign shareholding in HDFC and HDFC Bank on a merged basis stood at 60.9%, slightly down from the 61.1% holding at the end of the December quarter.
That leaves room for foreign shareholders at 17.71%, comfortably above the 15% room required for the inclusion of a stock in the MSCI India Standard Index.
“It is critical for the additional investible foreign room to be above 15% till the merger gets completed,” said a report by Nuvama Institutional Equities.
If the room remains above the 15% threshold, then the brokerage says it could lead to foreign investment flows of up to $3 billion.
“If the merger closes before the MSCI May 2023 Quarterly Comprehensive Index Review, inflows in HDFC Bank can increase to $3 billion,” the brokerage said.
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