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Banks (Finance)

RBI, Sebi to Look into Regulatory Issues Related to Carlyle's Investment in PNB Housing Finance

Strategic Insights

— 1 min read

The Reserve Bank of India (RBI) and the Securities and Exchange Board of India (Sebi) are investigating "regulatory issues" related to the proposed investment by US-based Carlyle Group and others in PNB Housing Finance. The concerns of minority shareholders, corporate governance, and other regulatory aspects will be looked into by the two regulators. This development comes after a proxy advisory firm, Stakeholders Empowerment Services (SES), expressed concerns about the deal, questioning whether Punjab National Bank (PNB) had willingly surrendered control without fair compensation.

Key Takeaways:

  • The RBI and Sebi are investigating regulatory issues related to the proposed investment by Carlyle Group and others in PNB Housing Finance.
  • The concerns of minority shareholders, corporate governance, and other regulatory aspects will be looked into by the two regulators.
  • Stakeholders Empowerment Services (SES) has expressed concerns about the deal, questioning whether PNB had willingly surrendered control without fair compensation.
  • The deal will change the control of PNB Housing Finance, with PNB's stake coming down to 20.28% and Carlyle's stake rising to 50.16%.
  • Carlyle Group will become the major shareholder and promoter along with its persons acting in concert, including Aditya Puri, the former MD and CEO of HDFC Bank.
  • The RBI had previously shot down a proposal of PNB to infuse capital into the subsidiary through a rights issue.
  • PNB managing director and CEO S.S. Mallikarjuna Rao said the bank will neither be investing nor divesting its stake, but its shareholding could come down to 21% due to investment from other sources.

Statistics:

  • The proposed investment by Carlyle Group and others is valued at Rs 4,000 crore.
  • PNB's original stake in PNB Housing Finance was 32.64%, which will come down to 20.28% after the deal.
  • Carlyle's original stake was 32.21%, which will rise to 50.16% after the deal.
  • PNB's managing director and CEO S.S. Mallikarjuna Rao said the bank's shareholding could come down to 21% due to investment from other sources.

Sources:

  • ABP Private Limited (Copyright 2021 ABP Private Limited, distributed by Contify.com)

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