The Securities Appellate Tribunal (SAT) set aside SEBI’s directions pertaining to the voting rights of PNB Housing’s stakeholders this Monday.
This regulatory body allowed PNB Housing Finance to move ahead with its extraordinary shareholder’s meeting, which is scheduled for Tuesday. The topic of discussion for this said meeting is regarding the proposal of Rs. 4,000 crore-investment from Carlyle, a private equity firm, on a preferential basis.
Though PNB Housing has been allowed to carry on with its voting, it has also been directed to withhold the voting results until further notice. Additionally, SAT has directed PNB Housing to request the NSDL to maintain confidentiality about the voting patterns.
SEBI Vs SAT: A brief recap
A week ago, SEBI had sent a letter to PNB Housing Finance. As per the letter, the mortgage lender was asked to drop its plan of preferential allotment until the time its shares are evaluated by a trusted and independent valuer.
Additionally, the advisory firm, Stakeholders Empowerment Services (SES), flagged this prospective deal as ‘unfair’ to both PNB and its public shareholders.
After receiving SEBI’s directive, the mortgage lender moved to the SAT with this concern. PNB argued that the preferential allotment is in favour of the promoter bank and its shareholders. It also stressed that the company’s plan complies with its Articles of Association, SEBI’s laws and pricing regulations.
The Rs. 4,000 crore deal – In a nutshell
PNB Housing Finance’s board has given a green signal to the Rs. 3,200 crore worth preferential allotment of share units. It also approved warrants worth Rs. 800 crore to Carlyle, General Atlantic, Aditya Puri’s Salisbury Investments and Alpha Investments at Rs. 390/ piece. However, one must note that the book value of PNB Housing Finance shares is set at Rs. 540.
If this deal goes through, it is expected that this transaction could lead to an open offer where nearly 26% of public shares could be acquired at Rs. 403 per share. This proposal will also lead to the replacement of the state-owed PNB by Carlyle as its controlling shareholder.
The shares of this mortgage lender doubled at Rs. 881 after this lucrative deal was announced. However, amidst all these uncertainties surrounding this deal, PNB’s shares plummeted by 5% this Monday (lower circuit limit) and closed at Rs. 702.40 p/s.
Currently, it seems this deal’s fate depends on fair valuation of a trusted and independent valuer. In case the valuation price of this acquisition inclines towards the higher end, the fate of this deal would largely depend on Carlyle and the concerned investors‘ agreement.