PNB Housing Finance cancels agreement with Carlyle
Bombay: PNB Housing Finance said on Thursday that the board of directors has decided to end the ??Sale of 4,000 crore of shares to Carlyle, an investor group led by Carlyle, citing pending legal proceedings. In an exchange brief, the housing finance company noted that the Carlyle Pluto Investments company initiated the process to withdraw from the open offer after the housing finance company decided not to go ahead. with preferential allocation.
“There is still no visibility or certainty as to the timing of judicial determination of legal issues, particularly given that a third member of the SAT has yet to be appointed… In addition, the regulatory approvals required for the preferential issue are pending and it is not clear whether such approvals will be obtained while legal proceedings are pending, ”the company said.
Carlyle’s investment was crucial for PNB Housing, whose business was affected by the liquidity crunch that hit non-bank lenders after IL & FS collapsed in September 2018. The company’s finances have continued to grow. been affected by the covid-19 pandemic.
“The main objective of the board 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,” the company said. .
With the deal being canceled, the mortgage lender will have to seek other sources of funding to support growth. The company has already received shareholder approval to increase ??Debt of 35,000 crore in the form of non-convertible debentures.
On May 31, a group of investors led by Carlyle Group announced an investment of ??4,000 crore in GNP housing finance.
Carlyle Group Inc., Pluto Investments, an affiliate of Carlyle Asia Partners IV, and Carlyle Asia Partners V have agreed to invest up to ??3,185 crore through a preferential allocation of shares and warrants to ??403.22.
However, the transaction came under scrutiny by the Securities and Exchange Board of India (Sebi) after proxy advisor Stakeholders Empowerment Services (SES) called the deal “unfair and abusive” for minority shareholders of the mortgage lender. The market regulator halted the sale of the stake. and asked the company to conduct an independent valuation before pricing any fundraising transaction.
PNB Housing Finance then moved the SAT, challenging the regulator’s directive, and the appeals tribunal allowed the company to seek shareholder approval for the transaction at an extraordinary general meeting (EGM), but ordered that the results of the vote be kept under seal until further orders. SEBI then approached the Supreme Court after the SAT returned a split verdict.
The mortgage lender has been trying to raise funds for a few years. The Reserve Bank of India had banned parent company Punjab National Bank from injecting capital into the housing finance subsidiary. The mortgage lender had previously planned a qualified institutional placement, which would have led PNB to participate through a rights issue. This would have meant that PNB held more than 30 percent of the capital of HFC, which would have resulted in a violation of regulatory standards.
“The company is back to square one in terms of fundraising. The overhang will continue again. We have to see if they were successful in making a deal with another investor, ”said an analyst covering the stock.
PNB Housing Finance shares closed down 1.6% at ??639.05 per share
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