As a result, the company has terminated the membership agreements it had executed with Carlyle and will seek other options to raise capital.
Carlyle’s arm Pluto Investments Saral and other investors will withdraw the offer to buy a stake in the company.
At the end of May, the board of PNB Housing approved the placement of 82 million preference equity shares and 20.5 million share warrants with Carlyle Group units Pluto Investments, Salisbury Investments, General Atlantic Singapore Fund FII Pte Ltd and Alpha Investments V Pte Ltd. . Investors were able to get the shares at Rs 390 per share, a discount of about 11% over the closing price the day before the deal was announced.
The sharp rise in the share price prompted advisory firms to oppose the deal because it was being heavily discounted, handing over control to Carlyle without seeking a valuation from an independent valuer.
Following reports from advisory firms, stock market regulator Securities and Exchange Board of India (SEBI) put the transaction on hold and asked PNB Housing to seek a report from an independent valuer.
A split decision was announced following PNB Housing’s appeal in the Securities Appellate Tribunal (SAT), in which the SAT member ordered in favor of the company, while the judicial member upheld the stay of SEBI.
The deal remained on hold and SEBI appealed against the contention of the SAT member Supreme court, which is currently pending.
“There is no visibility or certainty as to the timeline for judicial determination of legal issues, especially as the third member of the SAT is yet to be appointed … due to protracted litigation and interim orders issued by the SAT dated June 21, There is no clarity on shareholders’ approval to initiate preferential issue, 2021. Furthermore, necessary regulatory approvals for preferential issue are pending and it is not clear whether such approval will be forthcoming during the legal proceedings underway. Hence, there will be further delay in the company’s capital raising plans and such uncertainty will prevail.”
PNB Housing Trying to raise capital since last two years. The latest development will delay this further.
The company’s first quarter net profit declined 5% to Rs 243 crore from Rs 257 crore in the same period last year. Gross NPAs rose to 6% of loans as of June 2021, from 3.6% a year ago.
The company said its primary objective is to raise capital to support growth and that its board believes the current situation is not in the best interest of the company and its stakeholders.
Shares of PNB Housing closed at Rs 641 per piece on the BSE, down 1.36% on Thursday.