Conflict of curiosity: PNB Housing board that cleared majority stake for Carlyle has hyperlinks with Carlyle

RAISING questions of company governance and battle of curiosity, a majority of the board members of PNB Housing Finance Limited that determined to situation shares value Rs 4,000 crore to buyers led by US personal fairness big The Carlyle Group, have hyperlinks to Carlyle.
Former HDFC Bank MD Aditya Puri, who has joined Carlyle as senior advisor, may even be issued shares.
The board’s transfer to situation shares, as reported by The Indian Express, might scale back the stakeholding of Punjab and National Bank in its housing finance subsidiary to beneath 26 per cent — a reversal of its personal acknowledged public dedication.
Of the 12 members, two are Carlyle workers and are nominee administrators by advantage of the agency having a 32 per cent stake within the firm — Sunil Kaul and Kapil Modi. After the share allotment, it will go as much as over 50 per cent.
Five others on the board have a Carlyle hyperlink. Consider:
* Hardayal Prasad, MD & CEO of PNBHF since August 2020: In July 2020, Prasad took voluntary retirement as MD and CEO of SBI Cards and inside a month joined PNB Housing as its MD & CEO. In March 2020, Prasad was behind SBI Cards’s Rs 9,500-crore public situation wherein Carlyle supplied 9.3 crore shares (out of 24.24 crore shares it held) elevating over Rs 7,000 crore by means of its supply.

Carlyle had acquired a 26 per cent stake in SBI Card from GE Capital in December 2017 for round Rs 2,000 crore and made an enormous revenue in lower than three years.
Prasad was appointed MD and CEO of SBI Cards in February 2018. Just 4 months after the IPO, he took VRS, stop SBI Cards and joined PNBHF. While his remuneration in SBI Cards was Rs 66 lakh for 2018-19, PNB Housing employed him at a set wage of Rs 1.91 crore and a efficiency linked variable pay of Rs 1.4 crore. The board determined to pay a minimal of Rs 1.12 crore of variable pay for the primary yr. Prasad was additionally granted 5.5 lakh ESOP on the then market worth.
* Neeraj Madan Vyas, non-independent director since September 1, 2020: Vyas was an unbiased director on the Board of PNBHF from April 19, 2019 to April 27, 2020 — and MD & CEO of PNB Housing Finance Limited from April 28, 2020 to August 10, 2020.
Vyas superannuated as Deputy MD and COO of SBI in June 2018. Negotiations for GE’s stake sale in SBI Cards went on when he had total management of SBI Cards. And when Carlyle accomplished GE’s stake buy in December 2017, Vyas was Deputy MD, SBI Corp. Central Mumbai, and was on the board of SBI Cards.
* Chandrasekaran Ramakrishan, unbiased director since 2015: He retired as govt vice chairman of Cognizant India in March 2019. He first joined the board of PNBHF in October 2015 and was reappointed in October 2020. In 2016-17, when Carlyle bid for GE’s stake in SBI Cards, Cognizant was the technical companion of Carlyle within the bid and Chandrasekaran was vice chairman of Cognizant.
* Nilesh S Vikamsey, unbiased director since April 2016: A chartered accountant by occupation and previous president of ICAI, he’s a senior companion in Khimji Kunverji & Co. He joined the PNBHF board in April 2016 and was reappointed in April 2021.
RoC data present Vikamsey was additionally a director in SBI Cards between August 2019 and November 2020. Of the ten corporations the place he has been a director, there are at the very least six the place Carlyle has been an investor together with PNB Housing, SBI Cards and SBI Life. Vikamsey is on the boards of three IIFL Group corporations the place Carlyle was an investor.
* T M Bhasin, unbiased director since April 2020: He’s additionally an unbiased director on the board of SBI Cards and SBI Life the place Carlyle is an investor. He is ex-CMD of Indian Overseas Bank and an ex- Vigilance Commissioner.
Detailed questions despatched to Neeraj Mohan Vyas, R Chandrasekaran, Nilesh Vikamsey, TM Bhasin, Carlyle and PNB didn’t elicit any response.
Responding to questions mailed to Prasad, a PNBHF spokesperson instructed The Indian Express: “The Company followed due process for the hiring of the MD & CEO. The Company hired a reputed consultant for search of suitable candidate and the final candidate was approved by the Board.”
Asked concerning the battle of curiosity in a number of administrators having linkages with Carlyle and SBI, the corporate mentioned, “All directors of the company are obliged to periodically disclose all their ongoing engagements within the company as strictly mandated against laid out compliance norms under the law. The Company received all necessary general disclosures from its directors, including independent directors and do not see any conflict.”

The presence of board members in corporations with a standard investor places a query mark on their independence and, subsequently, raises problems with company governance, a company governance knowledgeable mentioned.
Incidentally, Vyas’s hyperlink to Carlyle was flagged on the PNBHF board assembly on August 6, 2020 known as to debate Vyas’s appointment.
Fellow director Gourav Vallabh known as it a “perceived conflict of interest” that went “against the foundations of corporate governance”. But his objections have been ignored and Vyas was appointed. Vallabh additionally raised related objections to Prasad’s appointment as MD and CEO. When contacted, Vallabh declined to remark.