Carlyle Group's Rs 4,000 crore fund infusion proposal in Punjab National Bank (PNB) Housing Finance is being questioned by a government watchdog. According to Stakeholders Empowerment Services (SES), a leading “proxy advisory firm” to protect minority shareholder interests, the proposal by investors led by US private equity giant The Carlyle Group is against the interest of public shareholders of the mortgage lender, parent company Punjab National Bank (PNB), a report in Business Standard said.
It has also called the transaction “ultra vires” of the Articles of Association and said it is a “unfair transaction, against public shareholders and PNB” according to Indian Express.
SES has raised several questions about PNB’s preferential allotment to Carlyle, which gave the private equity firm control over PNB Housing Finance Company (PNBHFL), Moneycontrol said. It has questioned the legitimacy of the transaction and alleging corporate governance lapses, the report said.
The watchdog has recommended PNB Housing public shareholders to cast ‘against’ votes against the resolution on preferential allotment, Business Standard said.
Sources told CNBC-TV18, PNB did not get the approval of Reserve Bank of India (RBI) . However, the deal for capital raise has been arrived with due diligence, said PNB, the report said.
On the BSE today, shares of PNB Housing was down Rs 31.40 or (3.56 percent at Rs 850.
Shares of PNB Housing last closed at Rs 881 per share and has surged 118 pecent since 25 May.
Caryle Group fund infusion to PNB Housing Finance
On May 31, PNB Housing Finance Limited today announced that its Board has approved a capital raise of up to Rs 4,000 crore, led by entities affiliated to The Carlyle Group In
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”) has agreed 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. Existing shareholders of the Company, funds managed by Ares SSG and General Atlantic, are also participating in the capital raise. PNB will continue to be the promoter and a key stakeholder in the Company.
The transaction is subject to customary regulatory approvals as well as shareholder approval. Pursuant to the Securities and Exchange Board of India’s Takeover Regulations, the proposed transaction will trigger a mandatory open offer by Pluto Investments S.a.r.l. for the purchase of up to 26 percent equity shares of PNB Housing Finance from public shareholders.
As part of this transaction, Salisbury Investments Pvt. Ltd., the family investment vehicle of Aditya Puri, Senior Advisor for Carlyle in Asia and the former CEO and Managing Director of HDFC Bank, will also invest in the capital raise. Aditya Puri is expected to be nominated to the PNB Housing Finance Board as a Carlyle nominee Director in due course.
As part of this transaction, Salisbury Investments Pvt. Ltd., the family investment vehicle of Aditya Puri, Senior Advisor for Carlyle in Asia and the former CEO and Managing Director of HDFC Bank, will also invest in the capital raise. Aditya Puri is expected to be nominated to the PNB Housing Finance Board as a Carlyle nominee Director in due course.
The key objective of raising capital is to augment capital adequacy, reduce gearing and accelerate growth with a focus on retail housing including self-employed and affordable housing loans such as the Unnati segment. Assuming full capital infusion (including warrants) and no other change to the March 31, 2021 financials, the capital adequacy ratio of the Company as of March 31, 2021 would increase from 18.7 percent to over 28 percent and gearing as of March 31, 2021 will decline from 6.7x to less than 5x.