Sebi stops PNB Housing deal with Carlyle

sebi, PNB Housing shareholders, EGM notice, valuation of shares, under the lens of Sebi and RBI, private equity major Carlyle group

The Securities and Exchange Board of India (Sebi) has directed PNB Housing Finance (PNBHF) to halt its proposed Rs 4,000-crore share allotment to a clutch of companies led by the Carlyle Group.

In a stock exchange filing on late Saturday evening, PNBHF said Sebi has restrained the lender from going ahead with shareholders’ voting on June 22. The regulator has further directed the company to carry out the valuation process as per the relevant legal provisions.

Earlier, the extraordinary general meeting (EGM) of the firm was scheduled for June 22 to approve the issuance of shares to a consortium of investors led by the Carlyle Group. Sebi said the resolution regarding the deal was ultra-vires of the company’s Articles of Association (AoA).

PNB Housing Finance in filing on Saturday said, “The current resolution bearing item no 1 (issue of securities of the company and matters related therewith) of EGM notice dated May, 31, 2021, is ultra-vires of AOA and shall not be acted upon until the company undertakes the valuation of shares as prescribed under 19(2) of AOA, for purpose of preferential allotment, from an independent registered valuer as per the provisions of applicable laws”.

The action from the market regulator came after a proxy advisory firm had highlighted that proposed preferential issue by PNB Housing Finance was against the interest of public shareholders, PNB shareholders and the government. In a note to institutional investors, Stakeholders Empowerment Services (SES), headed by former Sebi ED JN Gupta, had argued that a rights issue would have been a fairer and better option for raising capital. SES had recommended PNB Housing’s public shareholders to vote against the resolution on preferential allotment.

Last month, PNB Housing’s board had approved a preferential allotment of Rs 3,200 crore worth of shares and `800 crore worth of warrants to Carlyle, Aditya Puri’s family investment vehicle Salisbury Investments, General Atlantic and Alpha Investments at `390 per share. The lender also said Aditya Puri was likely to be nominated to the firm’s board as a Carlyle nominee director.

The fund-raising by the non-bank lender had been in the offing after it announced it would mop up Rs 1,800 crore through a preferential or rights issue in November 2020. Parent Punjab National Bank, however, did not get the approval from the RBI to infuse capital into the subsidiary.

PNB Housing Finance had registered a net profit of Rs 127 crore during the March quarter (Q4FY21), against a net loss of Rs 242 crore in Q4FY20.

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