FTSE to implement upweight of HDFC Bank in three tranches starting September

HDFC was merged into HDFC Bank on July 1, 2023.

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The revised free float of HDFC Bank, as a consequence of its merger with Housing Development Finance Corporation (HDFC), will be implemented in three tranches starting from September 2023 onwards, FTSE Russell said in a notification issued on August 7.

"FTSE Russell proposes to implement the upweight of HDFC Bank in three tranches in conjunction with the September 2023, December 2023, and March 2024 index reviews, with the December and March tranches contingent on the company’s foreign headroom continuing to satisfy the minimum 10 percent headroom requirement," the notification stated.

Currently, the shares in the issue amount to 308.2 crore, with an investability weight of 95.9 percent. The index shares add up to 295.8 crore.

In the first tranche of September, the shares in issue will come in at 754.49 crore, with an investability weight of 74 percent, and the index shares will be numbered at 383.3 crore. The tranching factor at this stage will be 33 percent, as per the details shared by FTSE.

Also Read | An era ends as HDFC shares stop trading on stock exchanges

In the second tranche of December 2023, the tranching factor will increase to 66 percent, the shares in issue will be 754.49 crore, the investability weight will be 74 percent and the index shares will add up to 470.8 crore.

In the third tranche of March 2024, the tranching factor will reach the 100 percent-mark, and the index shares will rise to 558.3 crore. The shares in issue will remain the same as 754.49 crore and the investability will continue to be 74 percent.

"FTSE Russell has considered client feedback on the significant size of the projected upweight and the potential impact to the company’s foreign headroom if the shares in issue and free float update are implemented in their entirety on a one-off basis at the September review," the notification said, adding that consequently it was decided to implement the changes in three tranches.

The HDFC-HDFC Bank merger came into effect on July 1, leading to the formation of a $172 billion-merged bank entity, which is ranked fourth in equity market capitalisation in the world. As a result of the merger, the shares of HDFC were delisted from the Indian bourses on July 13.