E-Paper
PNB tells arm to reconsider ₹4,000 crore Carlyle deal
PNB Housing told exchanges on Wednesday that its board met on July 5 and 6 after receiving the letter from its parent on July 4. The housing finance company said it will decide on the issue after the Securities Appellate Tribunal (SAT) pronounces its judgement.
State-run Punjab National Bank has asked the board of its PNB Housing Finance Ltd unit to reconsider the contentious ₹4,000 crore stake sale to Carlyle Group and others, and carve out an alternative capital-raising plan compliant with regulatory rules.
PNB Housing told exchanges on Wednesday that its board met on July 5 and 6 after receiving the letter from its parent on July 4. The housing finance company said it will decide on the issue after the Securities Appellate Tribunal (SAT) pronounces its judgement.
“The PNB letter conveyed a decision taken by the board of directors of PNB at their meeting held on July 3 2021 (on the basis of a legal opinion obtained from a law firm and deliberated at such board meeting) that, in their view, the board of directors of the company should take cognizance of the directive issued by Sebi vide their letter dated 18 June 2021 and reconsider restructuring the contours of the deal/transaction of the capital-raising in line with such Sebi directive,” PNB Housing said.
On June 23, Mint first reported that Punjab National Bank may have vetoed the deal and was likely to propose an alternative capital raising plan. This came after the Securities and Exchange Board of India (Sebi) halted the stake sale and asked the company to conduct an independent valuation before pricing any capital-raising deal.
The company said that after discussing the matter, the board of PNB Housing, by a majority resolution passed on July 6, decided that since the issue involved relates to the interpretation of the law and is sub-judice before SAT, the company will await the tribunal’s order on this issue. SAT will hear the matter on July 12. PNB wants its housing finance arm to propose a capital-raising plan that won’t attract Sebi’s objection.
“PNB Housing, as a listed entity, should have clearly disclosed it to all the shareholders through an exchange filing that firstly the company has received such a letter from its promoter and the largest shareholder,” said J.N. Gupta, founder and managing director of SES. “This is price-sensitive information and would have influenced the market price of PNB Housing’s stock; it would have helped the public shareholders of PNB Housing take an informed decision while trading in PNB Housing’s stock.”
Shareholders of PNB Housing on June 22 voted on a special resolution for a preferential allotment of shares to Carlyle and other investors. The parties to the deal are PNB and private equity firms Carlyle, General Atlantic and Ares SSG, which own a combined 85% stake in PNB Housing.
Controlling over 32% as a promoter group, Punjab National Bank can block the special resolution by voting against the preferential allotment of shares to the investors led by the Carlyle Group.
