Finalising Rights Issue PNB Housing Finance Board Plans to Raise Around INR 2500 crore

PNB Housing Finance Ltd said on March 9, 2022 that its board of directors had authorised a Rs 2,500 crore rights issue, months after cancelling a Rs 4,000 crore fund-raising agreement with a Carlyle-led consortium of investors.

In a notice to exchanges, the company said, "Inter-alia approved the proposal for raising up to Rs 2,500 crore subject to receipt of regulatory approvals, as may be required, by way of issue of equity shares on a rights issue basis to the eligible equity shareholders of the company as on the record date."

The business said that the issue price, rights entitlement ratio, record date, timing, and payment conditions will be established in due course.

The company's board of directors cancelled a Rs 4,000-crore fund-raising agreement with a Carlyle-led group of investors in October2021, citing ongoing legal concerns that would have caused regulatory clearances to be delayed.

Carlyle's investment was critical for PNB Housing's ability to increase lending in the face of increased demand for house loans and low interest rates.

The suspension of the capital injection proposal was particularly significant since the arrangement would have seen Carlyle Group, located in the United States, take control of the lender.

After proxy advisor Stakeholders Empowerment Services (SES) called the sale unjust and abusive to the mortgage lender's minority shareholders and a breach of the company's articles of association (AoA) related to valuation, the Securities and Exchange Board of India (SEBI) looked into it.

The issue price of Rs 390 per piece, according to the regulator, was too low in compared to the current stock price.

The share sale was blocked by the regulator, who also requested that the lender do an independent appraisal.

SEBI's direction in SAT, which enabled the lender to seek shareholder approval but required the vote results to be kept under a sealed cover until further instructions, was contested by the firm.

Following a divided decision by the SAT, the SEBI went to the Supreme Court.

After being struck by a liquidity constraint after the bankruptcy of Infrastructure Leasing & Financial Services Ltd (IL&FS) in September 2018 and subsequently by the pandemic, the mortgage lender has been attempting to obtain capital for the previous several years.

The Reserve Bank of India has previously prohibited parent Punjab National Bank from injecting money into PNB Finance.

On Wednesday, PNB Housing Finance's stock finished slightly higher at INR 418.80 a share on the National Stock Exchange.