PNB Housing Finance holds shareholders meeting over Carlyle deal

NEW DELHI: PNB Housing Finance held its much-awaited extraordinary general meeting (EGM) on Tuesday to seek shareholders’ approval for a Rs 4,000 crore capital infusion into the company led by US-based Carlyle Group. However, the outcome of the meeting was awaited till late night, even as the EGM was learnt to have concluded in the day.

When contacted, the company said it will inform about the outcome of the meeting through stock exchange filings.

A day earlier, the Securities Appellate Tribunal (SAT) set aside a Sebi order, allowing PNB Housing Finance to go ahead with the shareholders’ meeting on Tuesday to consider the proposed Rs 4,000 crore investment by private equity firm Carlyle and others in the mortgage firm.

The SAT ruling came after PNB Housing Finance had moved the tribunal, seeking approval to go ahead with the proposed EGM.

On June 18, Sebi had directed the company to defer consideration of the capital infusion proposal till a valuation of the company’s shares is done by a registered independent valuer.

In a not-so-often seen move, Sebi not only restrained PNB Housing Finance from going ahead with voting on the proposal but also directed that the matter should be placed afresh before the company’s board of directors and then a decision be taken on the basis of the independent valuation.

Under the proposed deal, PNB Housing Finance will allot securities worth Rs 4,000 crore to Carlyle and other entities, a deal that will eventually result in the private equity major becoming a major shareholder of the company.

On Tuesday, shares of PNB Housing Finance rose 4.99 per cent to close at Rs 737.45 apiece on BSE.

The proposed transaction has come under the lens of Sebi and the Reserve Bank of India (RBI) following concerns raised in certain quarters, including by a proxy advisory firm.

The proposal is for allotting a total of 8,20,51,281 equity shares and 2,05,12,820 warrants exchangeable into equity shares for Rs 390 per share/ warrant to Pluto Investments S.a r.l, Salisbury Investments Pvt Ltd, General Atlantic Singapore Fund FII Pte Ltd and Alpha Investments V Pte Ltd in specified proportions.

These securities would be allotted for a cash consideration aggregating to around Rs 4,000 crore.

Pluto Investments, an affiliated entity of Carlyle Asia Partners IV L.P. and Carlyle Asia Partners V L.P. (together Carlyle) have agreed to invest up to Rs 3,185 crore in PNB Housing Finance.

Besides, existing shareholders of the company, funds managed by Ares SSG and General Atlantic will be participating in the capital raise, along with Salisbury Investments, the family investment vehicle of Aditya Puri, Senior Advisor for Carlyle in Asia. Puri is the former CEO and MD of HDFC Bank.

Once the deal is completed, the stake of Carlyle Group in the mortgage firm will rise to 50.16 per cent from 32.21 per cent, a development that would trigger an open offer.

Last week, Carlyle Group along with other entities floated a ‘draft letter offer’ with regard to the open offer for acquisition of over 7 crore equity shares representing 26 per cent stake in PNB Housing Finance.

An open offer is a mandatory offer that an acquirer and Persons Acting in Concert (PACs) have to make to the shareholders of a company in case the former acquires more than 25 per cent stake in the company, as per Sebi regulations.

In case of creeping acquisition too, the clause of open offer kicks in when an entity or PACs make an acquisition of more than 5 per cent stake in a company in a year.

Meanwhile, there are reports of conflict of interest of directors on the board of PNB Housing Finance as they have some direct or indirect connection with Carlyle.

Earlier this month, proxy advisory firm SES said the proposed deal was an “unfair transaction” which was against public shareholders as well as the promoter bank PNB and also flagged concerns about a proposal to re-appoint two independent directors.