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Sebi looks into deal between PNB Housing Finance, Carlyle – Times of India

MUMBAI: After an institutional advisory firm raised serious questions about the deal between global private equity major Carlyle and other entities to buy a substantial stake in PNB Housing Finance, markets regulator Sebi has asked stock exchanges to look into the transaction.
Sources said bourses have asked PNB Housing Finance, a listed entity, to share the details of the deal under which the company is set to make a preferential allotment to Carlyle and other entities for Rs 4,000 crore.
After the allotment, Carlyle and five other entities are set to make an open offer to PNB HFC shareholders at Rs 403 per share to acquire 26% of the expanded capital of the company. However, since the announcement of the deal, the stock price has more than doubled to its Friday close on the BSE at Rs 818. Once the open offer ends, the PE major and its associates could hold over 50% in the company.
On Wednesday, SES, an institutional investor advisory firm, had alleged that the whole process of preferential allotment in PNB HFC was ultra vires of law and its structure is against the minority shareholders of the mortgage finance company. It also alleged that the process adopted gives indirect management control to the PE major and would lead to a Rs 2,000-crore loss to PNB, one of the largest government-run banks. Through an email, PNB HFC had told TOI that the entire process was done after due diligence and so structured to benefit all shareholders.
In its report, SES had raised several concerns, which included whether a rights offer was a better proposition than a preferential structure. It also said that by opting for a preferential allotment PNB, the current majority owner in the company, would lose at least Rs 2,000 crore. SES also pointed out that 85% of the shareholders were part of the deal while only the public shareholders were left out. It had also said that the pricing of the offer was a convenient refuge under Sebi’s capital raising rules.

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