PNB Housing Finance To Not Proceed With Rs 4,000-Crore Preferential Issue

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PNB Housing Finance Ltd. will no longer pursue the Rs 4,000-crore preferential issue with private equity firm Carlyle Group, ending a process that brought it at odds with the market regulator and other entities over the deal valuation.

“…at a meeting held today, the board has decided not to proceed with the preferential issue and the share subscription agreements executed with the proposed allottees have been terminated in accordance with their respective terms,” the company said in an exchange filing on Thursday.

The preferential issue plan, according to the housing financier’s board, had been put on hold for four months, without any visibility or certainty on the timeline.

Subsequently, Pluto Investments, along with persons acting in concert will be initiating the process to withdraw the open offer made by them. Pluto Investments is an investment vehicle for Carlyle.


The housing finance company, had announced in May that its board approved the preferential issue, following which Carlyle would become its largest shareholder. Other investors participating in the issue included General Atlantic, Alpha Investors and Aditya Puri’s family investment vehicle, Salisbury Investments.

The board had arrived at a price of Rs 390 per share for the purposes of the preferential allotment through a valuation process it had undertaken.

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Stakeholder advisory firms advised minority shareholders to vote against the process. While the proposal was voted upon by shareholders at an annual general meeting, the results of the process is currently held in a sealed envelope.

The matter was also taken up by the Securities and Exchanges Board of India in June, when it sent an advisory letter stating that the valuation of shares undertaken by the company was “ultra vires” of Articles of Association.

The market regulator also said that the issue shouldn’t be acted upon till the company undertakes the valuation of shares as per prescribed rules using an independent registered valuer. Even parent Punjab National Bank sent a note to the PNB Housing Finance board asking it to restructure the deal.

The matter was then taken up by the Securities Appellate Tribunal, which delivered a split verdict as it was one member short. SEBI appealed against the SAT ruling at the Supreme Court, which has put the case on hold till the tribunal appoints a third member, who can then cast a deciding vote on the matter.

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