PNB HF scraps Rs 4K-crore deal with Carlyle-led group of investors

Protracted litigation, uncertainty reasons for move: Firm

Fed up with the protracted litigation and uncertainty over approvals, the board of PNB Housing Finance (PNB HFC) decided to drop plans for a preferential issue of equity shares to raise Rs 4,000 crore from a group of investors led by private equity fund Carlyle.

The firm informed the stock exchanges on Thursday that Carlyle and other investors will also withdraw their open offer to PNB HF shareholders.

The fundraising plan, which included a preferential allotment of Rs 3,200 crore worth of shares and Rs 800 crore worth of warrants, had run into controversy after a proxy advisory firm raised objections. The deal was subsequently halted by the Securities and Exchange Board of India (Sebi).

The firm had challenged that order at the Securities Appellate Tribunal (SAT), which passed a split verdict. Sebi, however, filed an appeal against the SAT order at the Supreme Court, which is pending. In its exchange filing, PNB HF said there continued to be no visibility or certainty over timeline for judicial determination of the legal issues, as a third member of the Securities Appellate Tribunal (SAT) is yet to be appointed.

As a result of this uncertainty, there was no clarity on the shareholders' approval for the preferential issue.

The firm said regulatory approvals required for the preferential issue were also pending and it was unclear whether such approvals would be forthcoming while the legal proceedings were ongoing. Therefore, the firm said, its capital raising plans would be delayed further.

“...the board believes that the current situation is not in the best interests of the company and its stakeholders,” PNB HF said in the notice.

Consequently, Carlyle PE entity Pluto Investments S.a.r.l (together with persons acting in concert) will initiate the withdrawal of its open offer (at Rs 403.22 per share).

As a result, the company said, it will look at other options to raise capital.

PNB HF’s AUM stood at Rs 71,828 crore as on June 30. The company’s capital adequacy ratio stood at 21.4 per cent with tier-I capital of 18.4 per cent and tier-II capital at 3 per cent at end of June.