PNB Housing-Carlyle deal: ‘Carlyle deal for PNB Housing unfair to small shareholders’

Mumbai: A report by SES, an institutional investor advisory firm, has alleged that the whole process of preferential allotment in to global PE major Carlyle was ultra vires of law and is against the minority shareholders of the mortgage finance company. It also alleged that the process adopted to give management control to the PE major would lead to a Rs 2,000-crore loss to PNB, one of the largest government-run banks. HF, however, said the process was done after proper due diligence and will benefit all shareholders.

According to the SES report, the proposed preferential issue is against the interest of public shareholders and also shareholders of PNB and the exchequer. It raised several concerns which include if a rights offer was a better proposition and by opting for preferential allotment it sacrificed at least Rs 2,000 crore. It also pointed out that 85% of the shareholders were part of the deal while only the public shareholders were left out. It also said the pricing of the offer was a convenient refuge under Sebi’s capital-raising rules. It also said that one of the resolutions related to fund raising was ‘ultra vires’ Articles of Association of PNB HF.

A spokesperson for PNB HF said that the deal for capital raising was arrived at “with appropriate due diligence keeping best interests of all stakeholders in mind”. “The culmination of this deal is a distinct reflection of PNB HF’s ability for retaining the faith and confidence of all of its existing investors.”