PNB Housing Finance said on Monday that its board has approved a proposal to raise Rs 4,000 crore. “The board of the company approved a capital raise plan of Rs 4,000 crore through preferential issue of equity shares and warrants,” the lender said in a statement. Aditya Puri, former chief executive of HDFC Bank and Carlyle Group, an US-based private equity firm have emerged as the leading investors, according to the statement released by PNB Housing Finance.
The Carlyle Group would contribute 80% of the fundraising, the company informed the stock exchange. The remaining amount would come from other existing shareholders Ares SSG, Geneneral Atlantic and Salisbury Investments. “Salisbury Investments, family investment vehicle of Aditya Puri, former CEO & MD of HDFC Bank is also investing in the capital raise,” the lender said.
“The transaction is subject to customary regulatory approvals as well as shareholder approval. Pursuant to the Securities and Exchange Board of India’s Takeover Regulations, the proposed transaction will trigger a mandatory open offer by Pluto Investments S.a.r.l. for the purchase of up to 26% equity shares of PNB Housing Finance from public shareholders,” a company statement said.
Aditya Puri would be nominated to the board of PNB Housing Finance by Carlyle in due course, the company further added. Post the capital infusion, the capital adequacy ratio of the company as of March 31 will increase from 18.7% to over 28%, the lender said.
The key objective of the capital raise is to augment capital adequacy, reduce gearing and accelerate growth in retail segment. It shall help achieve the ‘New Agenda’ set out by the company in January,” PNB Housing Finance said. “This capital raise provides enough capital buffer to strengthen the company’s balance sheet to face any potential stress from second or subsequent COVID waves,” it added.
Commenting on the fundraising plan, Hardayal Prasad, managing director and chief executive officer of PNB Housing Finance said, “This fund raise, and Carlyle’s continued support, puts us in a strong position to benefit from the growing opportunities in the housing finance sector including in the affordable housing loans and self-employed segments, where we have developed differentiated capabilities in terms of distribution, underwriting and customer service.”
“The current fund raise and planned strengthening of the Board and management team will enable us to accelerate our strategic priorities, including further expanding our footprint, driving the company’s digitalization, improving our operating model and customer engagement,” he further added.
“We have developed a strong partnership with PNB Housing Finance since our investment six years ago, leveraging our industry expertise and networks to help the Company navigate sector headwinds, strengthen its business, and position it for future growth. This substantial additional investment reflects Carlyle’s strong commitment to India as a core market. We look forward to continuing our partnership with a leading bank like PNB to support the Company as it embarks on a new growth journey,” said Sunil Kaul, managing director of the Carlyle Asia advisory team.
Shares of PNB Housing Finance jumped 20% at 11.50 am after the board had announced fund-raising plan.
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