Sebi places on pause Rs 4,000-cr Carlyle, PNB Housing deal

In a letter issued to PNB Housing Finance (PNBHF) late Friday night, the capital markets regulator, Securities and Exchange Board of India (Sebi), has successfully placed on pause its Rs 4,000-crore share allotment to a clutch of firms 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%.

On May 31, PNBHF issued a discover for an Extraordinary General Meeting (EGM) of shareholders to be held on June 22 to approve the issuance of its shares to buyers led by Carlyle together with Aditya Puri, former MD of HDFC Bank and a senior advisor to Carlyle.
Following that announcement, PNBHF share value doubled over the subsequent week.

Calling the EGM discover “ultra vires” of the corporate’s Articles of Association (AoA), Sebi mentioned it shouldn’t be acted upon till the corporate undertakes the valuation of shares — as prescribed in its AoA – by an impartial registered valuer.
In an announcement to the inventory exchanges late Saturday night, PNBHF, as instructed by the regulator, made public the contents of Sebi’s letter.
In its letter, Sebi additional mentioned that the valuation report by the impartial valuer ought to be thought of by the corporate’s board whereas deciding on the preferential situation.
PNBHF, nonetheless, claimed its board of administrators believes that the corporate acted in compliance with all related relevant legal guidelines. “The company is evaluating further steps in this regard,” it mentioned indicating that it could problem the Sebi letter.
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 mentioned, ignored its AoA which requires the worth to be “determined by the valuation of a registered valuer.”
Given that the e book worth of PNBHF share is Rs 540, that may have pegged it at a extra life like stage, consultants mentioned, because it offers a sign of its intrinsic worth.
Instead, the corporate glided by SEBI guidelines on pricing below which it’s primarily based on both 12-week or two-week highs.
The desire share allotment by PNBHF will go away PNB with simply 20.3% stake within the housing finance main. This means it won’t solely lose its dominant shareholder standing but additionally its veto energy on the board of the corporate. The Carlyle Group will see its stake rise to above 50 per cent.

On June 14, The Indian Express additionally reported that of the 12 PNBHF board members who cleared the allotment, a minimum of seven had dealings with the US PE big — together with two Carlyle workers who’re nominee administrators.