PNB Housing drops Rs 4,000 cr fund-raising plan with Carlyle-led group
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Fed up with protracted litigation, uncertainty over approvals, PNB Housing Finance Ltd (PNB HFC) has decided to drop plans for a preferential issue of equity shares to private equity fund Carlyle led investors. In-run, Carlyle and other investors will also withdraw open offer to PNB HFC shareholders.
The company had planned to raise about Rs 4,000 crore in capital from Carlyle and other investors for funding business growth. Today’s development cast a shadow on the company fundraising plans, at least for now.
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, PNB HFC said in filing with BSE.
The deal for capital infusion by Carlyle, Former HDFC Bank CEO Aditya Puri and others, announced on May 31, had come under the lens of markets regulator Sebi with respect to valuation. PNB HFC had challenged Sebi’s directive and the matter is before the Securities Appellate Tribunal (SAT), which has reserved its order.
Public sector lender Punjab National Bank held a 32.59 per cent stake as promoter in HFC at the end of June 2021. The housing finance company stock closed 1.62 lower at Rs 639.05 per share on BSE.
There was no clarity on the shareholders’ approval for undertaking the Preferential issue due to the protracted litigation and the continuing interim order of the Securities Appellate Tribunal (SAT) dated June 21, 2021.
In addition, regulatory approvals required for the Preferential Issue, are pending. It was 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.
The Board’s primary objective is to raise capital to support the growth and believes that the current situation is not in the best interests of the Company and its stakeholders. Hence, the board decided not to proceed with the Preferential Issue. The share subscription agreements executed with the Proposed Allottees have been terminated in accordance with their respective terms, HFC added.
Consequently, Carlyle PE entity Pluto Investments S.a.r.l (together with persons acting in concert) will initiate the process to withdraw the open offer made by them (at Rs 403.22 per share).
In view of the above, the Company shall evaluate other alternatives to raise capital. PNB HFC’s Asset under Management (AUM) stood at Rs 71,828 crore as on June 30, 2021.
The Company’s capital adequacy ratio stood at 21.4 percent with Tier I capital of 18.4 per cent and Tier II capital at 3.0 percent at end of June 2021.
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