The proposal by a clutch of investors led by Carlyle Group to infuse Rs 4,000 crore in PNB Housing Finance is against the interest of public shareholders of the mortgage lender, parent company Punjab National Bank (PNB) and the government, a governance watchdog has said.
PNB Housing’s board approved last week approved preferential allotment of Rs 3,200 crore worth of shares and Rs 800 crore worth of warrants to Carlyle, Aditya Puri’s family investment vehicle Salisbury Investments, General Atlantic and Alpha Investments at Rs 390 per apiece. Puri is an advisor at the Carlyle Group and before that he was the managing director of HDFC Bank.
Shares of PNB Housing last closed at Rs 881 per share. The stock has nearly doubled following the Carlyle deal announcement.
Stakeholders Empowerment Services (SES), the watchdog, has recommended PNB Housing public shareholders to cast ‘against’ votes against the resolution on preferential allotment.
“On the face of it, SES finds this deal unfair to public shareholders of the company and shareholders of PNB. As controlling shareholder of the company, PNB has blown away the value,” it said in a note. “Presently, PNB Housing is bracketed as a public sector undertaking…PSUs historically for millions of reasons get valuations which are quite low compared to private sector peers across all sectors.”
The transaction will trigger an open offer as Carlyle will replace state-owned PNB as the controlling shareholder of PNB Housing.
The open offer to acquire 26 per cent shares from the public will be made at Rs 403 per share.
“The open offer is a mere formality given the present market price. It is highly unlikely that any shareholder would tender their shares,” SES said.
PNB holds a 33 per cent stake in PNB Housing. Carlyle, along with persons acting in concert (PAC), hold 32 per cent. Post the capital infusion, PNB’s holding will drop to 20 per cent, while Carlyle and PACs will increase to 50 per cent.
SES has questioned PNB’s decision to allow its stake slip below 26 per cent.
“Press release dated January 23, 2020 made a categorical statement that PNB will not dilute its stake in the company below 26 per cent and without any warning or explanation PNB is doing just the opposite,” SES has observed.
Source: Business-Standard