THERE’S rising concern within the Government after capital markets regulator Sebi referred to as the Rs 4,000-crore share issuance by PNB Housing Finance (PNBHF) to a clutch of traders led by US personal fairness big The Carlyle Group as “ultra vires” of the corporate’s Articles of Association (AoA), The Indian Express has learnt.
Officials are flagging issues over the “fairness of process and valuation,” and the best way the deal has been structured by which shares have been offered at a reduction to the ebook worth.
While PNBHF just isn’t a confused entity and its NPAs are “manageable” given the prevailing ranges of capitalisation, “a control transaction (majority stake acquisition) is happening without payment of control premium (premium for relinquishing control),” mentioned a senior Government official. “This is bound to raise questions over fairness of process and the valuation methodology, especially when the acquisition price is nearly 30 per cent below the book value.”
If the shareholders approve the desire share allotment Tuesday and authorized points don’t are available in the best way, the Carlyle Group will develop into a majority shareholder within the firm (with over 50 per cent stake within the firm) and can carry down the stake of Punjab National Bank in its housing finance subsidiary to round 20.3 per cent. This means it is not going to solely lose its dominant shareholder standing but in addition its veto energy on the board of the corporate.
While the desire share allotment to traders together with Carlyle was mounted at Rs 390, the ebook worth of PNB Housing share is Rs 540.
The official identified that PNBHF is on the trail to restoration with a few of its company mortgage resolutions being supported by the SWAMIH Fund (Special Window for Affordable & Mid-Income Housing) arrange by the federal government.
PNBHF maintained that the corporate acted in compliance of all of the relevant legal guidelines and moved the Securities Appellate Tribunal on Monday looking for aid. Giving its nod to PNBHF to carry its extraordinary normal assembly (EGM) Tuesday for shareholder approval of the Rs 4,000-crore allotment, SAT directed the corporate to not declare the outcomes of voting till additional orders. It additionally requested the corporate to tell the National Securities Depository Ltd (NSDL) to withhold the consequence.
On Friday, Sebi had issued a letter to PNBHF that its May 31 discover for the EGM to approve the allotment was “ultra-vires” of the corporate’s AoA and shouldn’t be acted upon till the corporate undertakes the valuation of shares — as prescribed in its AoA – by an unbiased registered valuer.
Experts mentioned SAT’s interim order is in step with Sebi’s course. While Sebi had not referred to as for cancellation of the EGM, it had mentioned that the corporate mustn’t act upon the decision regarding the problem of securities. Even SAT has acknowledged that whereas the corporate can go forward with its EGM, it shall not declare the outcomes of the voting.
On June 14, The Indian Express had reported that of the 12 PNBHF board members who cleared the allotment, no less than seven had dealings with the US PE big — together with two Carlyle workers who’re nominee administrators.
