PNB advises Housing arm to rejig Carlyle deal as per Sebi order

PNB Housing to await SAT's order before taking a call on restructuring

Punjab National Bank (PNB) has advised its housing finance arm to restructure its fundraising deal with investors, led by the Carlyle Group, in accordance with the recent directive by the Securities and Exchange Board of India (Sebi). However, PNB Housing Finance has decided to wait for the Securities Appellate Tribunal’s (SAT) order, expected to be pronounced on July 12.

A day before the scheduled hearing of SAT on July 5, PNB wrote to PNB Housing Finance, asking it to take cognisance of Sebi’s June 18 directive and consider restructuring the contours of the deal in line with the market regulator’s order. The PNB letter conveyed the decision taken by its board on July 3, based on legal opinion obtained from a law firm.

After receiving the letter, the board of PNB Housing met on July 5 and July 6, and, by a majority resolution, decided to await SAT’s order as the matter relates to interpretation of law and is sub judice, the mortgage lender said in a statement.

Last month, PNB Housing had announced its capital-raising plan that involved the preferential allotment of shares worth Rs 3,200 and Rs 800 crore worth of warrants to a clutch of investors led by the Carlyle Group. Proxy advisory firm Stakeholders Empowerment Services (SES) had called the deal “unfair” to public shareholders of the company and shareholders of PNB. Just a few days before the proposal could go for a vote, Sebi directed PNB Housing to stop the preferential allotment of shares unless the valuation is done by an independent valuer.

The mortgage lender then moved SAT, challenging the regulator’s directive. The appellate tribunal allowed the company to conduct its scheduled extraordinary general meeting, but with the caveat that the outcome of the vote would not be disclosed. The final hearing in the matter is scheduled on July 12.