PNB Housing hits 5% lower circuit on calling-off Rs 4,000 cr Carlyle deal

The board of PNB Housing Finance has decided not to proceed with a preferential issue of shares to investors led by Carlyle after the plan was delayed due to pending legal proceedings.

Shares of PNB Housing Finance were locked at the 5 per cent lower circuit at Rs 607.10 on the BSE on Monday in an otherwise strong market, after the housing finance company called-off the Rs 4,000 crore deal with Carlyle-led group of investors.

The board of PNB Housing Finance decided not to proceed with a preferential issue of shares to investors led by Carlyle after the plan was delayed due to pending legal proceedings. The share subscription agreements executed with the proposed allottees have been terminated. Carlyle’s Pluto Investments will be initiating the process to withdraw the open offer for PNB Housing made at Rs 403.22 per share.

With today’s fall, the share price of PNB Housing Finance has slipped 34 per cent from its 52-week high level of Rs 924 touched on June 8, 2021. Till 10:51 am; a combined 48,073 equity shares had changed hands and there were pending sell orders for 762,806 shares on the NSE and BSE. In comparison the S&P BSE Sensex was up 0.85 per cent at 61,830.

On May 31, 2021, the board of PNB Housing Finance had approved to raise Rs 4,000 crore through a preferential issue of equity shares and share warrants to a group of proposed allottees led by entities affiliated to the Carlyle Group Inc.

The board discussed that the proposed preferential issue has been held up for more than 4 (four) months (after already having taken over two years), due to the pending legal proceeding before the Securities Appellate Tribunal ("SAT"), PNB Housing said in exchange filing on Thursday after market hours.

There continues to be no visibility or certainty as to the timeline for judicial determination of the legal issues, in particular as a third member of the SAT is yet to be appointed. The Board further noted that due to the protracted litigation and the continuing interim order of the SAT dated June 21, 2021, there is no clarity on the shareholders' approval for undertaking the Preferential Issue, it added.

The board's primary objective is to raise capital to support the growth of the company, and the board believes that the current situation is not in the best interests of the company and its stakeholders. Accordingly, at a meeting held today, the board has decided not to proceed with the preferential issue and the share subscription agreements executed with the proposed allottees have been terminated in accordance with their respective terms, PNB Housing said.