PNB Housing-Carlyle deal: Sebi to probe board position, disclosure lapses

The Securities and Exchange Board of India (Sebi) is planning to probe the position of the board of administrators of PNB Housing Finance within the Carlyle stake deal.
According to sources, the market regulator has conveyed its intention to probe the position of board of administrators and the corporate no matter the decision of the Securities Appellate Tribunal (SAT) on the Sebi motion in opposition to PNB Housing. Punjab National Bank MD & CEO S S Mallikarjuna Rao is the Chairman of the PNB Housing board.
The regulator, in its submissions to SAT on Friday, additionally made it clear that no matter whether or not the deal goes by means of or not, the board approval in itself can have ‘legal consequences’. The regulator additionally alleged that there are quite a few disclosure lapses on the a part of the housing finance firm, which must be handled individually.

The case has been adjourned and shall be heard once more on Monday, when PNB Housing will get an opportunity to counter Sebi’s argument.
PNB Housing moved SAT in opposition to Sebi’s June 18 order. In its interim order, the tribunal gave its nod to PNB Housing Finance (PNBHF) to carry its Extraordinary General Meeting (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.
Sebi had earlier successfully placed on pause its Rs 4,000-crore share allotment to a clutch of corporations led by the Carlyle group. This would have made the US-based non-public fairness big a majority shareholder within the firm and introduced down the stake of Punjab National Bank in its housing finance subsidiary to below 26 per cent.
On May 31, PNBHF issued a discover for an EGM of shareholders to be held on June 22 to approve the issuance of its shares to traders led by Carlyle together with Aditya Puri, former MD of HDFC Bank and a senior advisor to Carlyle.
Calling the 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 impartial registered valuer.
On June 8, The Indian Express reported how a number one proxy advisory agency, Stakeholders’ Empowerment Services, on the behest of minority shareholders, had crimson 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 worth to be “determined by the valuation of a registered valuer.”

Given the e book worth of PNBHF share is Rs 540, that may have pegged it at a extra lifelike degree, specialists stated, because it offers indication of intrinsic worth. Instead, the corporate glided by Sebi guidelines on pricing below 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, at the very least seven had dealings with the US PE big — together with two Carlyle workers who’re nominee administrators.