Questions about Punjab National Bank (PNB) losing its dominant shareholder status in Punjab National Bank Housing Finance (PNBHF) are anticipated to be raised at the company’s shareholders meeting later this month. And, given the circumstances surrounding a consortium of investors spearheaded by US private equity behemoth The Carlyle Group’s Rs 4000-crore investment in PNBHF announced last week.
Carlyle will become PNB Housing’s largest shareholder as a result of the capital investment. Despite the fact that both the government and PNBHF officially said that PNB would retain a 26 percent share, this is what happened. PNBHF shares have doubled in value in the last six days, despite a report from Stakeholders’ Empowerment Services, a leading “proxy advisory firm” dedicated to protecting minority shareholder interests, describing the PNBHF board resolution on preferential issue of equity shares and warrants to the consortium as a “unfair transaction, against public shareholders and PNB.”
The transaction has also been dubbed “ultra vires” of the Articles of Association.
PNB Housing Finance’s preference share allocation to Pluto Investments, a Carlyle affiliate (which will subscribe to 80 percent of the shares issued), and Puri’s Salisbury Investments, as well as two other existing foreign investors, will leave PNB with only a 20.3 percent stake in the housing finance giant.