PNB Housing calls off Rs 4,000-crore share sale plan to Carlyle-led group
PNB Housing Finance on Thursday decided to terminate a Rs 4,000-crore deal with Carlyle Group, citing legal and regulatory difficulties which may delay its capital raising plans.
In May this year, the housing finance company had announced that the Carlyle group will lead the capital infusion with other investors that include Aditya Puri, the former MD & CEO of HDFC Bank.
Pluto Investments S.a.r.l. (Pluto Investments), an affiliated entity of Carlyle Asia Partners IV, L.P. and Carlyle Asia Partners V, L.P. were to invest up to Rs 3,185 crore through a preferential allotment of equity shares and warrants, at a price of Rs 390 per share in the housing finance company.
However, soon after the announcement, proxy advisory firms expressed concerns on the deal.
Stakeholders Empowerment Services (SES), raised a number of questions on the transaction wondering if Punjab National Bank (PNB) has willingly surrendered control without extracting a fair compensation. It had said that the deal is unfair to the shareholders of PNB Housing Finance while adding that the board of the company had agreed to price the preferential offer at a discount to book value.
Subsequently, the Securities and Exchange Board of India (Sebi) had asked the company to halt the preferential issue. However, this order was challenged by PNB Housing Finance at the Securities Appellate Tribunal (SAT) which passed a split verdict in August. Following this, the market regulator had appealed against the SAT verdict at the Supreme Court.
In a late evening statement on Thursday, PNB Housing Finance said that its board discussed that the proposed preferential issue has been held up for more than four months due to the pending legal proceeding before the SAT.
As per the interim order of the tribunal on June 21, while the shareholders of the company were allowed to cast their vote at the extraordinary general meeting on June 22, the results were not be declared and kept in a sealed cover.
“There continues to be no visibility or certainty as to the timeline for judicial determination of the legal issues, in particular as a third member of the SAT is yet to be appointed,’’ PNB Housing Finance said.
According to the company, its board further noted that due to the protracted litigation and the continuing interim order of the SAT, there is no clarity on the shareholders’ approval for undertaking the preferential issue.
“In addition, regulatory approvals required for the Preferential Issue, are pending and it is unclear whether such approvals will be forthcoming while the legal proceedings are ongoing. Therefore, the company’s capital raising plans will be further delayed and such uncertainty will continue,’’ the housing finance firm added.
It pointed out that the board’s main objective is to raise capital to support the growth of the company, and the board believes that the current situation is not in the best interests of the company and its stakeholders.