Regulators to look into PNB Housing Fin's plan to raise Rs 4,000 cr from Carlyle, other entities
Reserve Bank of India as well as Sebi will look into various regulatory issues related to the proposed Rs 4,000 crore-investment by US-based private equity firm Carlyle and others in PNB Housing Finance, sources said on Monday.
Earlier this year, RBI had shot down a proposal of Punjab National Bank (PNB) to infuse capital into its subsidiary PNB Housing Finance through a rights issue on concerns of the lender's financial health.
About the proposed deal, PNB Managing Director and CEO S S Mallikarjuna Rao, earler this month, said the bank will neither be investing nor divesting its stake but because of investment from other sources, its shareholding could come down to around 21 per cent.
Currently, PNB as a promoter holds 32.64 per cent stake in PNB Housing Finance.
PNB Housing Finance's Extraordinary General Meeting (EGM) is scheduled to be held on June 22 to seek shareholders' approval for the preferential allotment of shares on a private placement basis to Carlyle and other entities, besides other proposals.
The proposal is to allot a total of 8,20,51,281 equity shares and 2,05,12,820 warrants exchangeable into equity shares for Rs 390 per share/ warrant to Pluto Investments S.a r.l, Salisbury Investments Pvt Ltd, General Atlantic Singapore Fund FII Pte Ltd and Alpha Investments V Pte. Ltd in specified proportions. These securities would be allotted for a cash consideration aggregating to around Rs 4,000 crore.
Besides, existing shareholders of the company, the funds managed by Ares SSG and General Atlantic will be participating in the capital raise, along with Salisbury Investments, the family investment vehicle of Aditya Puri, Senior Advisor for Carlyle in Asia. He is the former CEO and MD of HDFC Bank.
There are reports of conflict of interest of directors on the board of PNB Housing Finance as they have some direct or indirect connection with Carlyle.
For instance, PNB Housing Finance's Managing Director Hardayal Prasad came from SBI Card where Carlyle is one of the promoters. Prasad joined PNB Housing Finance in August last year. Before this, he was heading country's largest lender SBI promoted pure-play credit card company -- SBI Cards and Payment Services (SBI Card).
While his remuneration in SBI Card was Rs 66 lakh for 2018-19, PNB Housing hired him at a fixed salary of Rs 1.91 crore and a performance-linked variable pay of Rs 1.4 crore. The board decided to pay a minimum of Rs 1.12 crore of variable pay for the first year.
When contacted, PNB Housing Finance said the company is currently occupied with the preparations related to its EGM later this month and hence would not be able to comment on conflict of interest issues.
Earlier this month, proxy advisory firm SES flagged concerns about the proposal to re-appoint Nilesh S Vikamsey and Chandrasekaran Ramakrishnan as Independent Directors (IDs), giving a rationale that their re-appointment is not in accordance with law.
As per the company's factsheet available on its website, both Vikamsey and Ramakrishnan are IDs. They were re-appointed by PNB Housing Finance's board and the re-appointment was subject to shareholders' approval.
The proposal for their re-appointment as directors through a special resolution is part of the agenda of the EGM to be held on June 22.
Under the Companies Act, a person cannot be re-appointed as an ID unless a special resolution is passed by shareholders in a general meeting.
In the current instance, as their tenure ended in October and April, they have ceased to be the IDs in PNB Housing Finance board and such an approval should have been taken on or before October 6, 2020 and April 21, 2021.
(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)
- READ MORE ON:
- Salisbury Investments
- PNB Housing Finance
- Companies Act
- Carlyle Group
- Extraordinary General Meeting (EGM
- Mallikarjuna Rao
- Hardayal Prasad
- Punjab National Bank
- Aditya Puri
- Pluto Investments
- MD of HDFC Bank
- General Atlantic
- Chandrasekaran Ramakrishnan
- Reserve Bank of India
- PNB Housing
- Securities and Exchange Board