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PNB Housing Finance Company Ltd’s (PNBHFL) Board of Directors will meet on Wednesday (March 9) to consider fund raising options for the housing finance company.
This Board meeting is significant as it comes less than two months after its Managing Director & CEO Hardayal Prasad said that PNBHFL is back to the drawing board to look at raising capital.
Pricing formula
It maybe recalled that PNBHFL was last year compelled to call off its ₹ 4,000 crore capital-raise plan involving Carlyle Group and other marquee investors. The ₹ 4,000-crore preferential issue of PNBHFL to private equity major Carlyle and other investors had hit a regulatory hurdle last year on the aspect of pricing of the preferential issue.
Market regulator SEBI had questioned the deal after it was alleged that PNBHFL was giving preferential allotment to Carlyle and other investors at a lower value than the prevailing market price. Post the PNBHFL-Carlyle deal fiasco, SEBI had brought in changes to the pricing formula for allotment of shares under preferential issues.
Prasad had in January this year said that the housing finance company is in discussions to decide on the modalities and the ideal route for a fresh capital raise.
While the PNBHFL management is taking the fund raising options to the Board for its approval on Wednesday, the amount that the company is looking to mop up or the route that is being planned has so far not been revealed.
If the PNBHFL Board were to approve any capital raising, the route for the fresh capital raise could be one of the three — QIP, preferential allotment or rights issue, corporate observers said.
AUM declines
PNBHFL has been transforming itself into a retail-focussed home loan provider and had taken a call to exit from corporate business. In the last two years, the company had reduced its corporate book by ₹12,000 crore, and this is one of the reasons why its overall assets under management (AUM) had gone down.
For 2022-23, PNBHFL has guided for a Net Interest Margin ( NIM) of 3-3.1 per cent, keeping in view that the company is not doing any corporate loan book. In the just concluded December 2021 quarter, NIM stood at 2.7 per cent (3.2 per cent).
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