PNB Housing Finance hit a lower circuit of 5% at Rs 702.40 after the Sebi restrained the company from going ahead with its proposed Rs 4,000-crore share allotment to a clutch of companies led by the Carlyle Group.
The Securities and Exchange Board of India (Sebi) has directed PNB Housing Finance (PNBHF) to carry out the valuation process as per the relevant legal provisions.
The market regulator said the resolution regarding the deal, which was to be put for shareholders' vote on 22 June 2021, was "ultra-vires" of the company's articles of association (AoA).
"The current resolution bearing item no. 1 (issue of securities of the company and matters related therewith) of EGM notice dated May, 31, 2021 is ultra-vires of AOA and shall not be acted upon until the company undertakes the valuation of shares as prescribed under 19(2) of AOA, for purpose of preferential allotment, from an independent registered valuer as per the provisions of applicable laws," PNB Housing Finance said in an exchange filing made on Saturday (19 June 2021), referring to Sebi letter dated 18 June 2021.
PNBHF said that its board has considered the Sebi letter, and continue to believe that the company has acted in compliance with all relevant applicable laws, including the applicable pricing regulations prescribed by SEBI, and the AoA of the company, and that such preferential allotment is in the best interests of the company, its shareholders and all relevant stakeholders.
On 31 May 2021, the board of the housing financier approved a capital raise of up to Rs 4,000 crore, led by entities affiliated to The Carlyle Group Inc. PNB Housing will raise Rs 3200 crore through preferential equity shares and Rs 800 crore through warrants. The issue price of equity shares and warrants is fixed at Rs 390 each.
PNB Housing said that the key objective of raising capital is to augment capital adequacy, reduce gearing and accelerate growth with a focus on retail housing including self-employed and affordable housing loans such as the Unnati segment.
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Assuming full capital infusion (including warrants) and no other change to the 31 March 2021 financials, the capital adequacy ratio of the company as of 31 March 2021 would increase from 18.7% to over 28% and gearing as of 31 March 2021 will decline from 6.7x to less than 5x.
In an exchange filing before market hours today, PNBHF said that the company has filed an appeal before the Securities Appellate Tribunal against the letter issued by the Securities and Exchange Board of India on 18 June 2021.
PNB Housing Finance is a deposit-accepting housing finance company, with second largest deposits outstanding within housing finance companies. The company provides housing loans to individuals for purchase, construction, repair, and upgrade of houses.
On a consolidated basis, PNB Housing reported a net profit of Rs 127 crore in Q4 FY21 compared with net loss of Rs 242 crore in Q4 FY20. Total income fell 6% to Rs 1,833.90 crore in Q4 FY21 over Q4 FY20.
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