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SEBI halts PNB Housing Finance's Rs 4,000 crore deal with Carlyle group

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The Securities and Exchange Board of India (SEBI) has directed Punjab National Bank Housing Finance to halt its proposed Rs 4,000 crore deal with Carlyle group.

SEBI halts PNB Housing Finance's Rs 4,000 crore deal with Carlyle group
The Punjab National Bank Housing Finance Limited on Saturday said that it has a received letter from the Securities and Exchange Board of India (SEBI) asking it to halt its proposed Rs 4,000 crore deal with Carlyle group.
In a letter to the Bombay Stock Exchange (BSE), the PNBHF said that SEBI has called the preferential share allotment “ultra-vires” (against the law) of the articles of association (AOA). The decision regarding allotment by issuing equity shares and convertible warrants was taken on May 31 this year at an Extraordinary General Meeting (EGM) of shareholders.
The regulator has asked the PNB Housing Finance to not act upon the allotment until the company undertakes the valuation of shares.
SEBI began probing the share allotment earlier this month after Stakeholders Empowerment Services (SES), an institutional investment advisory firm, claimed that by opting for a preferential allotment in housing finance, PNB would lose at least Rs 2,000 crore.
The deal is unfair to the mortgage lender’s minority shareholders and ultra vires the existing law, SES added.
The SES has also alleged that PNB was giving away control of its housing finance unit to the Carlyle Group, an American private equity firm, without seeking a “control premium".
However, in its letter on Saturday, PNB Housing Finance Limited told BSE, “The Company and its Board of Directors have considered the SEBI Letter, and continue to believe that the Company has acted in compliance with all relevant applicable laws.”
Earlier on May 31, SS Mallikarjuna Rao, MD & CEO of PNB had told CNBC-TV18, “Carlyle is an investor; it cannot be a promoter. PNB has been a promoter and as per the Reserve Bank of India (RBI) guidelines, we can continue to be promoters even if our stake comes to around 20 percent.”

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