SC Moves Court against SAT Order Regarding PNB Housing Case

SEBI appealed against SAT’s (Securities Appellate Tribunal) split verdict on the Punjab National Bank Housing – Carlyle case. Further, as per its BSE filing on 2 September, PNB Housing is currently inspecting SEBI’s appeal.

The company also added that the market regulator had filed an appeal with the apex court against SAT’s order.

Here’s a look at the details of what transpired!

PNB Housing – Carlyle Deal: What is the Fuss All About?

This trouble began in May 2021, when PNB Housing Finance Limited proposed a whopping Rs. 4000 crores deal with an American private equity firm Carlyle. According to this deal, PNB Housing will sell Rs. 800 crores and Rs. 3200 crores of warrants and shares respectively to Carlyle group, Salisbury Investments, Alpha Investments, and General Atlantic. The price of these shares was Rs. 390 per piece, which was much lower than its going market value.

Since this proposal, SEBI has been eyeing Punjab National Bank, finding this deal an apparent transgression of the law.

Additionally, SEBI issued a letter stating that the company fails to abide by the governing principles of a listed entity as written in the LODR Regulations and Company Act, 2013.

The PNB – Carlyle deal faced serious challenges by the market regulator, which then asked the company to hold it until it goes through an independent evaluation and calls off the coting.

Moving ahead,

PNB Housing approached the SAT, challenging SEBI’s orders, also questioning its authority to build such interventions.

After PNB’s approach, SAT allowed this company to continue with the voting but restricted it from disclosing its results from the shareholders’ votes regarding this deal.

Now, on 9 August 2021, SAT gave a split verdict on the PNB Housing – Carlyle deal. However, even after this decision, the apex court put forth an interim order instructing PNB Housing that the restriction on disclosing shareholders’ votes was still in force.

SAT’s Split Decision: SEBI Moves to Court

The split verdict by the two-member bench of the SAT happened due to differences of opinion. According to Justice MT Joshi, SEBI issued a valid notification. He also said that the EGM vote could not continue any further until the valuation report was acquired as per the AoA. Justice MT Joshi instructed that the AOA should then be placed in front of shareholders’ general body.

However, Justice Tarun Agarwala had a difference of opinion. According to him, SEBI shouldn’t have stopped the EGM as the issuance of shares was already approved by PNB board as per ICDR. Hence, shareholders had the right to vote.

All this finally led to SEBI’s approach to the apex court demanding further examination into this matter.

However, PNB Housing believes that SEBI went against SAT’s guidelines and said that they are currently examining this filed appeal.

Bottom Line

PNB Housing Finance Limited is circling around SEBI’s target for a few months. Now, it is crucial for investors to see Supreme Court’s reaction after this brave move by Securities and Exchange Board of India.

 

Frequently Asked Questions

1. Who are the key shareholders of PNB Housing?

Key shareholders of PNB Housing are Carlyle – 32%, PNB – 33%, Ares SSG – 10%, and General Atlantic – 10%.

2. What is the post-capital infusion scenario for PNB Housing?

Post this capital infusion, Carlyle group will become a promoter, and PNB will become a small shareholder.

3. How has this tussle affected PNB Housing shares?

On Thursday, shares of PNB Housing Finance Limited closed at Rs. 656 apiece on BSE, which was down 0.68% from the previous closing.