PNB Housing Files Appeal In SAT After SEBI Seeks Review Of Carlyle Deal

PNB Housing Finance has filed an appeal in the Securities Appellate Tribunal after the markets regulator sought a review of parts of the deal struck with investors led by private equity firm Carlyle.

The “company has filed an appeal before SAT against the letter issued by SEBI on June 18, 2021,” PNB Housing said in an exchange notification on Monday.

On Saturday, the company had informed exchanges that The Securities and Exchanges Board of India has sought a review of the proposed preferential issue by PNB Housing Finance Ltd. to a clutch of investors led by private equity firm Carlyle, questioning the valuation of shares.

The markets regulator found that the valuation of shares undertaken by the company was "ultra vires" of Articles of Association, according to an exchange notification from PNB Housing.

The regulator also said that the issue should not be acted upon till the company undertakes the valuation of shares as per prescribed rules using an independent registered valuer, in compliance with existing laws and the Articles of Association.

The report of the independent valuer must be shared with the board, while deciding on the preferential issue of shares and warrants, the regulator has instructed.

In a board meeting on May 31, PNB Housing Finance had announced a preferential issue of shares to a group of investors led by Pluto Investments, which is an entity connected to private equity firm Carlyle. The issue would help PNB Housing Finance raise Rs 4,000 crore. The preferential issue had also triggered the need for an open offer of shares.

The board had arrived at a price of Rs 390 per share for the purposes of the preferential allotment through a valuation process it had undertaken.

Former HDFC Bank chief executive Aditya Puri's family investment vehicle Salisbury Investments would also participate in the issue. Puri, also an advisor to the Carlyle Group, would join the board.

In the exchange notification on Saturday PNB Housing Finance said that the company and its board continued to believe that an independent valuation process had been conducted in compliance with applicable laws. It also said that the preferential allotment was in the best interest of the company, shareholders and all relevant stakeholders.

"The company is evaluating further steps in this regard," the exchange notification read.

The preferential allotment had prompted proxy advisory firm Stakeholders Empowerment Services to ask investors to vote against the proposed preferential allotment. The firm too had raised concerns over the pricing of the allotment, saying it did not capture the intrinsic valuation of the company

As part of the deal, public sector lender Punjab National Bank Ltd. would have seen its shareholding fall to around 20% from the existing 32.6% currently, though it would have retained the promoter tag.

Morhan Stanley, in a note on Monday, said the stock could be under pressure until further clarity emerges. “Our fundamental view remains positive as we await more details on the next steps from the company, such as details on the proceedings of the shareholders' EGM scheduled for June 22.”