PNB HFC-Carlyle pact: Deal complies with guidelines, PNB board told

According to an official present in the meeting, there was no change in the opinion of the PNB management towards the proposed investment of Rs 4,000 crore
Punjab National Bank (PNB) has informed its board members that all regulatory guidelines were followed by its associate company — PNB Housing Finance (PNB HFL) — while finalising the fundraising deal with the Carlyle Group and other investors.


According to an official present in the meeting, there was no change in the opinion of the PNB management towards the proposed investment of Rs 4,000 crore by the Carlyle Group and others in PNB Housing Finance.


Although the capital raising plan by PNB Housing was not a part of the listed agenda of the board meeting, the issue was discussed at the lender’s board meeting. “No doubts were raised on PNB Housing’s deal with Carlyle and other investors falling through,” the official said.  PNB and its associate PNB HFL can’t escape any regulations or mandated norms, the official said, adding that there has been misleading information about the mortgage lender’s deal.  All processes have been followed transparently to ensure nothing goes wrong, board members were told by PNB officials.


The PNB board includes its managing director Mallikarjuna Rao, three executive directors — Sanjay Kumar, Vijay Dube and Swarup Kumar Saha — government nominee Pankaj Jain, Reserve Bank of India nominee Vivek Aggarwal, and two shareholder directors — Asha Bhandarker and Gautam Guha.


Business Standard on Friday reported that the finance ministry has not found any wrongdoing by the management of PNB Housing in its fundraising plan, and all due processes have been followed while striking the deal with investors led by the Carlyle Group.


The government is looking at the issue and is awaiting Securities Appellate Tribunal (SAT) order due on July 5.


PNB Housing had announced the preferential allotment of shares worth Rs 3,200 crore and Rs 800 crore worth of warrants to the Carlyle Group, Aditya Puri’s family investment vehicle Salisbury Investments, General Atlantic and Alpha Investments at Rs 390 apiece. Proxy advisory firm Stakeholders Empowerment Services (SES) had called the deal “unfair” to public shareholders of the company and shareholders of PNB.


The mortgage lender had defended the deal stating that the process followed in determining the issue price for its securities was in line with the market practice and complied with the applicable law.


However, two days before the planned extraordinary general meeting (EGM) to vote on the fundraising plan, the Securities and Exchange Board of India (Sebi) directed the company to halt preferential allotment of shares unless the valuation is done by an independent valuer.


The mortgage lender then moved SAT, challenging the regulator’s directive. The tribunal allowed the company to conduct the scheduled EGM with the caveat that the outcome of the vote will not be disclosed.



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