PNB Housing Finance - Preferential Issue Called Off; Overhang Resurfaces: ICICI Securities
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ICICI Securities Report
PNB Housing Finance Ltd.’s board has decided not to proceed with the proposed preferential issue of Rs 40 billion at Rs 390 per share to Carlyle group, General Atlantic, SSG Group and other investors.
Preferential issue has been held up for more than four months (after already taking over two years), due to the pending legal proceeding before Securities Appellate Tribunal.
Also, in an exchange filing, the company highlighted that there is lack of visibility or certainty as to the timeline for judicial determination of the legal issues and regulatory approvals were not expected to be forthcoming amid litigation.
With proposed deal being off the table, the overhang resurfaces:
Carlyle raising its stake to 50% and thereby, PNB Housing Finance’s stake coming down to ~20% would have put to rest the overhang of any further stake sale in the interim.
Equity infusion of Rs 40 billion would have led to sharp uptick in capital adequacy ratio and reduced gearing to less than five times.
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