Share issue: SAT nod to PNB Housing Finance EGM

By Ankur Mishra

The Securities Appellate Tribunal (SAT) on Monday allowed PNB Housing Finance to go ahead with the extraordinary general meeting (EGM) scheduled for June 22.

The EGM will see shareholders vote on the mortgage player’s Rs 4,000-crore preferential share allotment to private equity player Carlyle and others, including General Atlantic and former HDFC Bank MD&CEO Aditya Puri’s family investment vehicle. The shares are to be priced at Rs 390 apiece.

However, the tribunal said the results of the voting were not to be disclosed. The HFC had been restrained by Sebi from going ahead with the vote on the proposed share sale. The market regulator had asked PNB Housing not to act on the preferential allotment until an independent valuation of shares was done.

Sebi restrained PNB Housing after proxy advisory firm SES highlighted the proposed preferential issue was against the interest of public shareholders, PNB shareholders and the government. SES had recommended to PNB Housing’s public shareholders that they vote against the resolution to issue shares.

However, PNB Housing moved SAT against Sebi’s June 18 order. SAT will hear the matter next on July 5.

Last month, PNB Housing’s board had approved a preferential allotment of `3,200 crore worth of shares and `800 crore worth of warrants to Carlyle, Aditya Puri’s family investment vehicle, Salisbury Investments, General Atlantic and Alpha Investments at `390 per share. Puri was expected to be nominated to the firm’s board as a Carlyle nominee director.

Sonam Chandwani, managing partner at KS Legal & Associates, said from a legal standpoint, the Caryle Group’s intent to acquire a stake in PNB Housing Finance will be subject to customary regulatory approvals as well as shareholder approval.

A bare perusal of PNB HF’s articles of association (AoA), read with rule 13 of Section 62 of the Companies Act, states that the price of the shares, to be issued on a preferential basis, shall not be required to be determined by the valuation report of a registered valuer, she added.

PNB Housing Finance had registered a net profit of `127 crore during the March quarter (Q4FY21) against a net loss of `242 crore in Q4FY20. The lender was able to curtail expenses by 28% year-on-year to `1,646 crore, but total revenue declined 6% y-o-y to `1,834 crore.

PNB Housing Finance on Monday closed 5% down at 702.4 per share on the BSE. The stock had doubled since the announcement of the fundraise on May 31 to reach `880 per share on June 7. Since then, the stock has corrected around 20% till Monday after the proxy advisory firm raised concerns on the deal.