International Finance Corporation (IFC) and South Korea’s KB Financial Group are set to buy minority stakes in mortgage lender PNB Housing Finance, placing their bet on India’s under-penetrated mortgage sector, even as trouble at Dewan Housing Finance Corporation has made the market jittery.
PNB Housing is aiming to raise Rs 1,500-1,600 crore in a share sale by March this year. IFC and KB Financial will be investing in the mortgage lender’s equity for the first time, people familiar with the development said. ET had earlier reported that the Carlyle Group and General Atlantic Singapore will also increase their stakes in the company.
The pricing for the share sale will be finalised ahead of the issue opening, according to market rules. On Thursday, shares of PNB Housing Finance closed 1.47 per cent lower at Rs 442.20 on the BSE.
The share sale will be done through the limited-preference route whereby a maximum of five investors can participate. PNB Housing Finance MD Sanjay Gupta declined to comment while IFC did not respond to an email. KB Financials could not be contacted.
Last year, when PNB Housing Finance raised $100 million (Rs 690 crore based on the exchange rate at the time) from IFC in external commercial borrowing, IFC’s spokesperson said that “to support the Indian government’s vision of housing for all by 2022, our country strategy places a strong emphasis on the affordable housing sector”.
Now, if all goes well, IFC will pick equity in the mortgage lender. The promoter of the company, state-run Punjab National Bank, will not invest in the share sale and therefore its holding is set to fall to around 27.5 per cent from the current 32.65 per cent. PNB Housing had last week announced that the promoter holding would not go below 26 per cent in any circumstance.
Carlyle holds 32.22 per cent of PNB Housing Finance through a group company, called Quality Investment Holdings. General Atlantic owns 9.87 per cent. PNB Housing Finance has lost more than half its market value, since its shares hit a 52-week high of Rs 991 in February last year. This is in step with a squeeze in the lender’s outstanding loan book to Rs 69,194 crore at the end of December from Rs 74,023 crore in March 2019.
Source: Economic Times