Vote denied by SEBI
In an unforeseen move, SEBI has in a rare regulatory move withheld PNB Housing Finance from going ahead with shareholders’ voting on the proposed Rs 4,000 crore-deal with Carlyle group and asked the company to carry out the valuation process only under legal frameworks.
The transaction, that came under the notice of SEBI and RBI following concerns raised in some quarters would eventually see private equity major Carlyle group taking control of PNB’s subsidiary, PNB Housing Finance. “The current resolution bearing item no. 1 of EGM is ultra-vires of AOA and shall not be acted upon until the company undertakes the valuation of shares, for purpose of preferential allotment, from an independent valuer as per the provisions of applicable laws,” PNB Housing Finance said referring to SEBI letter.
SEBI sent the letter on June 18, 2021, to the company, calling upon to agree with the legal provisions in the matter. PNB Housing Finance said in a statement that they considered the letter and yet believe they have acted in favour of relevant laws.
Stakeholders Empowerment Services (SES), and advisory firm, in its report, have raised a number of questions on the proposed deal. Rs 3,200 crore is to be raised through equity shares and Rs 800 crore by issuance of warrants in this deal. But, except for equity shares issued by the employee stock option plan, PNB Housing Finance has not raised any equity capital in the past three years.
Reserve Bank had rejected PNB’s proposal for a capital infusion into its subsidiary PNB Housing earlier in February, where the company had wanted to raise tier I capital up to Rs 1,800 crore through various ways, under which a total of 8.21 lakh equity shares and 2.05 lakh warrants are to be issued at an issue price of Rs 390 per share to Pluto Investments, Salisbury Investments, General Atlantic Singapore Fund FII Pte Ltd and Alpha Investments V.
Salisbury Investments is the family investment machinery of former HDFC CEO Aditya Puri, who is also a senior advisor for Carlyle. As per the deal, it will change the control of PNB Housing Finance to PNB being a joint control holder with Carlyle Group. With this, PNB’s stake in the company will come down to 20.28 per cent, while Carlyle’s will rise to 50.16 per cent.