PNB Housing Finance board followed all due processes: Finance Ministry

Remarks come a day before PNB board meeting

The board of PNB Housing Finance (PNB HFL) has followed all due processes while striking the fundraising deal with investors led by the Carlyle Group, and Punjab National Bank (PNB) would ensure the interests of its associate company are protected, said two finance ministry officials.

No controversy or wrongdoing has been found by the management of PNB Housing Finance in its fundraising plan, one of the two officials said. The government is looking at the issue and is awaiting Securities Appellate Tribunal (SAT) order due on July 5, he said.

The remarks from government officials come a day before PNB’s board meeting where the management is expected to apprise the members of the fate of PNB Housing’s fundraising plan. PNB’s board has one government nominee.

PNB has also carried out the due process while assisting the transaction as the lender is answerable to its shareholders and the regulator, the official said. “As the bank and mortgage lender have followed the rules of the game, nobody (shareholders and regulator) will overlook these facts,” he added.

PNB Housing had announced the preferential allotment of shares worth Rs 3,200 and Rs 800 crore worth of warrants to the Carlyle Group, Aditya Puri’s family investment vehicle Salisbury Investments, General Atlantic and Alpha Investments at Rs 390 apiece. Proxy advisory firm Stakeholders Empower­ment Services (SES) had called the deal “unfair” to public shareholders of the company and shareholders of PNB.

The mortgage lender had defended the deal stating that the process followed in determining the issue price for its securities was in line with the market practice and compliance with the applicable law.

Just a few days before PNB Housing’s extraordinary general meeting (EGM) to vote on the fundraising plan, Sebi directed the company to stop preferential allotment of shares unless the valuation is done by an independent valuer. 

The mortgage lender then moved SAT challenging the regulator’s directive, and the tribunal allowed the company to conduct the scheduled EGM with the caveat that the outcome of the vote will not be disclosed. The matter will come up for a final hearing on July 5.