SBI Fund Buys 9.99% in HDFC Bank: Impact on Unlisted Shares

In a significant development within the financial grounds, SBI Fund Management has made a noteworthy move by acquiring a substantial stake of 9.99% in HDFC Bank. This strategic investment marks a pivotal moment for both financial institutions and holds the potential to induce notable ramifications in the market. This blog is of particular interest is its impact on the unlisted share price of HDFC Bank.

SBI Fund Management, a renowned player in the financial sector, solidifies its position as a major shareholder in HDFC Bank. The esteemed private lenders, investors and stakeholders eagerly anticipate how this move will influence the value of HDFC Securities Limited unlisted shares. This article goes through the intricacies of this acquisition and its potential consequences on the unlisted market, offering insights for discerning investors and market observers.

SBI FML Acquisition Of 9.99% Stake In HDFC Bank

Reserve Bank of India (RBI) has approved the plea of State Bank of India Fund Management Limited (SBI FML) to acquire up 9.99% stake in HDFC Bank, as confirmed by the private sector lender in an exchange filing. The RBI's approval comes with the condition that SBIFML must complete the acquisition within six months, specifically by November 15, 2023, and ensure that the aggregate holding remains below 10% of the bank's paid-up share capital or voting rights at all times.

Following the successful acquisition, HDFC Bank will become wholly-owned by public shareholders, and the existing shareholders of HDFC will hold a 41% ownership stake in the bank. This merger is being referred to as a "merger of equals" by Deepak Parekh, Chairman of HDFC Ltd. The merger is anticipated to be completed in the second or third quarter of FY24, which will elevate HDFC Bank to a substantial lender on a global scale. Moreover, the proposed transaction will enable HDFC Bank to strengthen its housing loan portfolio and expand its customer base, as it already boasts a large customer base of Rs. 6.8 crores and a well-diversified low-cost funding base.

Impact Of SBI Fund Management Acquisition On HDFC Securities Limited Unlisted Shares

As for the impact on HDFC Securities Limited unlisted share prices, the acquisition by SBI Funds Management is likely to generate positive market sentiment and investors’ confidence. It can potentially lead to an increase in demand for HDFC Security Limited unlisted shares. However, the extent of the impact will largely depend on market dynamics, prevailing economic conditions, and investor perception towards the merger. Investors and market participants are advised to closely monitor developments in the coming months to assess the actual impact on unlisted share prices.

HDFC Securities Limited Unlisted Shares: An Overview

HDFC Securities Limited, a money-making player in the financial industry, offers unlisted shares in the broking sector. The company's unlisted shares are not yet available for public trading and are currently offered through private placements.The HDFC Securities Limited unlisted share price today stands at Rs 11,800.0. The company showcases a solid performance, with a market capitalisation of Rs. 181,600.0 million and outstanding shares of Rs. 16.0 million. Key financial indicators for the year 2022 reveal a face value per share of Rs 10.0 and a book value per share of Rs 1056.0. The Price to Earnings (PE) ratio is 18.2, while the Price/Sales ratio is 9.1. The Debt/Equity ratio is 3.8, reflecting the company's financial stability.

HDFC Securities Limited has displayed commendable financial performance, with a Return on Total Assets (ROTA) of 12.4%, a Return on Equity (ROE) of 59.4%, and a Return on Working Capital (ROWC) of 19.2%. SBI merger has played a significant role in increasing the value of HDFC Securities Limited. Since May 2023, HDFC Securities Limited pre IPO shares have been rising in value, and investors are getting high returns on their investment, especially after SBI has taken over a 9.99% stake in the company. So, it is a golden opportunity to buy unlisted shares for all investors looking forward to investing in profitable shares.

FAQs

1. What will happen to HDFC unlisted shares after the merger?

With effect from July 13, 2023, HDFC shares will be taken off from the BSE and NSE lists. But investors don’t need to worry because their HDFC unlisted shares will still be traded on the markets.

1. What happens if I have less than 25 shares of HDFC?

In this scenario, the investor will receive 25 HDFC Bank shares in addition to the remaining 0.2 shares in cash at the market price chosen by the corporation.

1. Is SBI buying HDFC?

The RBI has instructed SBI Funds to purchase the necessary shares in HDFC Bank within a six-month window concluding on November 15, 2023. Also, the fund management business will ensure that the total position in HDFC Bank is at most 10% of the voting rights or fully paid-up share capital.

1. Is the HDFC merger good for shareholders?

After the merger, what will happen to your HDFC shares? Effective July 13, 2023, your HDFC shares will be taken off the BSE and NSE lists. But it would be best if you didn't worry because your HDFC shares will still be traded on markets using the HDFC Bank scrip codes.

1. What is the stake of SBI in HDFC?

SBI Funds Management (SBI FML), a joint venture between the State Bank of India and France's AMUNDI, has been given permission by the Reserve Bank of India (RBI) to buy up to a 9.99% stake in HDFC Bank, and the company has been advised to do so within six months.