NEW DELHI: PNB Housing Finance Ltd’s Rs 4,000 crore deal with US private equity firm Carlyle Group Inc. has come under the scanner of Securities and Exchange Board of India (Sebi) after proxy advisory firm SES red flagged the deal structure.
“We are aware that some shareholders have flagged a complain with Sebi on the low valuation of PNB Housing-Carlyle deal. They are looking into it,” said sources in the finance ministry.
Sebi also asked stock exchanges to see if there any other red flags, sources said, In a recent report, Stakeholders Empowerment Services (SES) said that the deal was an abuse of minority shareholder rights and questioned as to why PNB willingly surrendered its control over its housing finance arm to the Carlyle Group without extracting fair compensation control premium.
SES also sees PNB having lost at least Rs 2,000 crore in not insisting on a rights issue. PNB Housing board approved preferential attotment of shares worth Rs 4,000 crore to Carlyle.
While PNB Housing said it was not giving away control to Carlyle, SES rubbished the claim saying that the fact that PNB has not cededed control is “technically incorrect”.
Carlyle along with persons acting in concert would hold more than 50 per cent stake in the company, which gives them controlling powers in terms of voting rights as per Sebi takeover code.
“PNB would have a 20 per cent stake (down from 33 per cent earlier) and would be reduced to a smaller partner,” the governance watchdog said.
Now, Carlyle and PNB both will have power to nominate two directors on the Board. “However, the post of chairperson shall be nominated by Carlyle,” SES said.
The company wants investors to believe that even with book value per share of about Rs 530, the proposed issue price is fair although book value indicates that the intrinsic value is quite higher than the issue price.