Sensex Jumps Over 400 Points, Reliance And ITC Top Gainers

PNB Housing Finance share price spiked 20% to hit an upper circuit of Rs 525.2 on the BSE after the company said its board has approved a capital raise of up to Rs 40 bn, led by entities affiliated to American private equity firm Carlyle Group.

Pluto Investments, an affiliated entity of Carlyle Asia Partners IV and Carlyle Asia Partners V has agreed to invest up to Rs 31.9 bn through a preferential allotment of equity shares and warrants at Rs 390 per share, the company said in an exchange filing.

Existing shareholders of the company, funds managed by Ares SSG and General Atlantic, are also participating in the capital raise. PNB will continue to be the promoter and a key stakeholder in the company.

The transaction is subject to customary regulatory approvals as well as shareholder approval.

According to the market regulator's Takeover Regulations, the proposed transaction will trigger a mandatory open offer by Pluto Investments for the purchase of up to 26% equity shares of PNB Housing Finance from public shareholders, the bank further added.

The key objective of raising capital is to augment capital adequacy, reduce gearing and accelerate growth with a focus on retail housing including self-employed and affordable housing loans such as the Unnati segment.

Assuming full capital infusion (including warrants) and no other change to the 2021 financials, the capital adequacy ratio (CAR) of the company would increase from 18.7% to over 28% and gearing would decline from 6.7x to less than 5x, PNB Housing said.

We will keep you posted on updates from this space. Stay tuned.

At the time of writing, shares of PNB Housing Finance were trading up by 20% on the BSE.

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Disclosure: Equitymaster Agora Research Private Limited (Research Analyst) bearing Registration No. INH000000537 (hereinafter referred as 'Equitymaster') is an independent equity research ...

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