PNB Housing Finance says Sebi has asked company to pause share sale

Market regulator says proposed Rs 4,000 crore share transfer is against the laws.

PNB Housing Finance says it has got a letter from India’s markets regulator asking the company to hold its Rs 4,000-crore share allotment to a clutch of companies led by The Carlyle Group.

Securities and Exchange Board of India (Sebi) is studying PNBHF’s Rs 4,000 crore share sale after a proxy adviser said earlier this month the deal is unfair to the mortgage lender’s minority shareholders.

The deal would make Carlyle, a US-based private equity giant, a majority shareholder in the company and bring down the stake of state-owned Punjab National Bank in its housing finance subsidiary to under 26 per cent, said a media report.

PNBHF on Saturday told BSE the market regulator’s letter asks the company not to act on the share and "comply with the legal provisions in the matter".

SEBI called as "ultra-vires” (against the law) the decision taken on May 31 at an Extraordinary General Meeting (EGM) of shareholders and should not be acted upon until the company undertakes the valuation of shares.

“The Company and its Board of Directors have considered the SEBI Letter, and continue to believe that the Company has acted in compliance with all relevant applicable laws,” said PNBHF in its letter to BSE.

PNBHF’s decision to preferentially allot Rs 3,200 crore worth of shares and Rs 800 crore worth of warrants to Carlyle, former HDFC Bank chief executive officer Aditya Puri’s family investment vehicle, General Atlantic, and Alpha Investments at Rs 390 a piece was “unfair” to public shareholders and shareholders, said Stakeholders Empowerment Services, a governance watchdog, in a report earlier in the June

The company, in its letter to Sebi, said it had complied with the laws the preferential allotment was "in the best interests" of shareholders.