NEW DELHI: PNB Housing Finance is preparing for a Rs 35,000 crore debt raising plan as its fundraising plan from private equity major Carlyle Group-led investors continues to be in limbo. In a regulatory filing on Wednesday, the mortgage lender said that it will seek shareholders’ nod for further fundraising by way of debt issue in its annual general meeting (AGM) scheduled on September 3, 2021.
“Shareholders’ approval is being sought in the 33rd AGM for further fund raising by way of debt issue and the shareholders are being requested to authorise the board of directors to offer, from time to time, the subscription of redeemable, secured/unsecured non-convertible debentures aggregating to Rs 35,000 crore in one or more tranches,” it said in the exchange filing.
The company has been deprived of capital since the Reserve Bank of India (RBI) stopped its principal promoter Punjab National Bank (PNB) from participating in a Rs 1,800-crore fundraise by its housing finance subsidiary. Even PNB Housing Finance’s plan to raise capital of up to Rs 4,000 crore from Carlyle Group, Aditya Puri’s family investment vehicle Salisbury Investments, General Atlantic and Alpha Investments through preferential allotment of shares worth Rs 3,200 crore and Rs 800 crore worth of warrants has hit a deadlock with the Securities Appellate Tribunal (SAT) giving a split verdict in the company’s appeal to the court.
Under the deal announced on May 31, the PNB board had arrived at a price of Rs 390 per share for the purposes of the preferential allotment through a valuation process it had undertaken, which is at a much lower price than its current market value. If the deal goes through, Carlyle Group will eventually become a promoter and PNB’s shareholding will get diluted to a little over 20% and thereby become a smaller partner. Currently, PNB holds a 33% stake in the housing financier.
The other key shareholders include Carlyle (32%), General Atlantic (10%) and Ares SSG (10%).
The proposed stake sale has faced resistance from the Securities and Exchange Board of India after proxy advisory firm Stakeholders Empowerment Services (SES) termed the deal “abusive” to the mortgage lender’s minority shareholders. Sebi, in a letter to PNB Housing, stated that the transaction should be halted until the company undertakes the valuation of shares by an independent valuer.
Sebi sought to stop the voting at the EGM, saying it was necessary for shareholders to get the correct valuation at which investors led by the Carlyle Group would acquire shares and management control. On June 18, however, PNB Housing challenged the Sebi order. In the absence of a consensus, SAT’s interim order — prohibiting PNB Housing Finance from disclosing the results of shareholder’s vote on the proposed deal — will continue to hold.