Money & Banking

PNB Housing shelves ₹ 4,000-cr share sale plan to Carlyle Group, other investors

K.R.Srivats New Delhi | Updated on October 15, 2021

PNBHFL decided not to proceed with the proposed preferential issue and therefore will now evaluate other alternatives to raise capital

PNB Housing Finance Limited (PNBHFL) has called off it’s proposed ₹ 4,000 crore share sale plan to Carlyle Group and other marquee investors including General Atlantic and Ares SSG, citing protracted delays and uncertainty over regulatory approvals required for the preferential issue.

At a Board meeting held on Thursday evening, PNBHFL decided not to proceed with the proposed preferential issue and therefore will now evaluate other alternatives to raise capital.

Also, all the share subscription agreements executed with the proposed allottees have been terminated.

SAT’s split verdict leaves PNB-Carlyle deal in limbo; case may go to apex court

Under the proposed deal, Pluto Investments S.a.r.l, an affiliated entity of Carlyle Asia Partners IV , L.P and Carlyle Asia Partners V, L.P (together , “Carlyle”) had agreed to invest upto ₹ 3,185 crore through a preferential allotment of equity shares and warrants, at a price of ₹ 390 per share. Existing shareholders of PNBHFL, funds managed by Ares SSG and General Atlantic were also to participate in the capital raise. Salisbury Investments (Former HDFC Bank CEO Aditya Puri’s family investment vehicle) was also part of the capital raise deal. PNB had earlier decided that it will not be participating in the capital raise but would continue to be promoter of PNBHFL.

Legal issues

However, the deal ran into rough weather in June after SEBI intervened and asked PNBHFL not to go ahead with the deal until the housing finance company undertakes valuation of its shares by an independent agency. PNBHFL preferred an appeal before Securities Appellate Tribunal ( SAT), which came with a split verdict on August 9. SEBI has preferred an appeal against the SAT verdict before the Supreme Court, which is pending.

Meanwhile, in a filing to the stock exchanges on Thursday night, PNBHFL said this proposed preferential issue has been held up for more than four months (after already having taken over two years), due to pending legal proceeding before the SAT. 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, PNBHFL said.

Noting that due to protracted litigation and the continuing interim order of the SAT dated June 21, 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.

PNBHFL said that the Board’s primary 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 interest of the company and its stakeholders. Accordingly, the Board has decided not to proceed with the preferential issue.

Consequently, Pluto Investments S.a.r.l ( together with persons acting in concert) will be initiating the process to withdraw the open offer made by them ( at ₹ 403.22 per share) in accordance with the SEBI Takeover code.

Interestingly, the Competition Commission of India had in early August approved (deemed approval under green channel) the Carlyle Group led ₹ 4,000 crore equity investment transaction in PNBHFL even as SAT was then yet to pronounce its verdict on the valuation controversy.

Published on October 15, 2021

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