PNB advises recasting deal, affiliate awaits SAT order

In what may be seen as a disregard to the advisory from its promoter — Punjab National Bank — to rethink restructuring of the Rs 4,000-crore deal between PNB Housing and traders led by Carlyle, the board of housing finance firm handed a majority decision and determined to attend for the order of the Securities Appellate Tribunal within the matter.
In a inventory trade submitting on Wednesday, PNB Housing Finance stated that its promoter PNB despatched a letter on July 4, by which it conveyed a call taken by the PNB board. According to the trade submitting, PNB board by means of its letter advised PNB Housing to “take cognizance of the directive issued by SEBI vide their letter dated June 18, 2021 and reconsider restructuring the contours of the deal/transaction of the capital raising in line with such SEBI directive.”
However, the board of PNB Housing determined to attend for SAT order. In its submitting with exchanges, PNB Housing stated that the board of the corporate by a majority decision handed on Wednesday, “decided that since the issue involved relates to interpretation of law and is sub-judice before the Hon’ble Securities Appellate Tribunal (“SAT”), the Board will await the SAT’s order on this concern.”
The concern revolves round issuance of desire shares price Rs 4,000 crore by PNB Housing to traders led by Carlyle. On May 31, PNBHF issued a discover for an EGM of shareholders on June 22 to approve the issuance of shares of the corporate to traders led by Carlyle together with Aditya Puri, former MD of HDFC Bank and a senior advisor to Carlyle.
On June 18, in a letter issued to PNB Housing Finance, the capital markets regulator, Securities and Exchange Board of India, had successfully placed on pause on its Rs 4,000-crore share allotment to a bunch of traders led by The Carlyle Group.
Calling this EGM discover “ultra vires” of the corporate’s Articles of Association (AoA), Sebi stated it shouldn’t be acted upon till the corporate undertakes the valuation of shares — as prescribed in its AoA – by an unbiased registered valuer.

PNB Housing moved the SAT on June 21 towards the Sebi discover. In its interim order the tribunal gave its nod to PNB Housing Finance to carry its EGM for shareholder approval to the share allotment to traders led by Carlyle. It additionally directed the corporate to not declare the outcomes of voting to be held on June 22 till additional orders from the tribunal.
While the listening to on the matter was scheduled for Monday, PNB Housing sought an adjournment and the Tribunal adjourned the case for July 12, 2021.
It is necessary to notice that if the shareholders authorised the desire share allotment on June 22, and authorized points didn’t are available in the way in which, the US-based personal fairness big would turn out to be a majority shareholder within the firm (with over 50 per cent stake within the firm) and can convey 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 additionally its veto energy on the board of the corporate.
On June 8, The Indian Express reported how a number one proxy advisory agency, Stakeholders’ Empowerment Services, on the behest of minority shareholders, had red-flagged the proposed transaction.

On the pricing of the desire share at Rs 390, PNBHF, the agency’s report stated, ignored its AoA which requires the value to be “determined by the valuation of a registered valuer.”
Given that the guide worth of PNBHF share is Rs 540, that might have pegged it at a extra real looking degree, consultants stated, because it provides indication of intrinsic worth.
Instead, the corporate glided by SEBI guidelines on pricing beneath which it’s based mostly on both 12-week or two-week highs.
On June 14, The Indian Express additionally 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.