A cyclist stops by in front of Punjab National Bank’s Brady House Branch in Mumbai, India. (Photographer: Anirudh Saligrama/BloombergQuint)

PNB To Sell Shares In PNB Housing Finance To General Atlantic, Varde Partners

Punjab National Bank will sell 13 percent stake in its housing finance arm to private equity firms General Atlantic and Varde Partners as the state-run lender, recovering from India’s largest banking fraud, looks to strengthen its capital base.

The bank will sell PNB Housing Finance Ltd.’s 1.08 crore shares each at Rs 850 apiece—to General Atlantic and Varde Partners—for Rs 1,850 crore, according to its exchange filing.

PNB’s stake in the mortgage lending subsidiary will fall to 19.78 percent from 32.79 percent as of December 2018. It will continue as the promoter and strategic shareholder of the company.

“It’s a decent price considering the current market situation,” Digant Haria, assistant vice president at Antique Stock Broking said. “We are valuing PNB Housing Finance at Rs 900 per share, so it’s a reasonable price.”

The money, he said, will help PNB shore up its capital base and make adequate provisioning . The proceeds will help strengthen the bank’s capital adequacy ratio, which stood at 10.52 percent as of December.

PNB, which was hit by Rs 14,000-crore fraud by diamantaire Nirav Modi and his uncle Mehul Choksi, posted a net profit of Rs 246 crore in the December-ended quarter. The bank’s gross non-performing assets stood at 16.33 percent and net NPAs at 8.22 percent at the end of December quarter.