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Sebi Bars PNB Real Estate Shareholders From Voting On Rs 4,000 Crore Deal With Carlyle Group

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In February, the RBI had declined PNB's proposal for capital infusion into PNB HousingIn a rare regulative move, Sebi has actually limited PNB Real estate Financing from going on with investors' voting on the proposed Rs 4,000 crore-deal with Carlyle group and directed the business to carry out the evaluation process as per the relevant legal provisions.

The watchdog stated the resolution relating to the offer, which was to be put for shareholders' vote on June 22, was ultra-vires of the company's Articles of Association (AoA).

The deal, which has come under the lens of Sebi and Reserve Bank of India (RBI) following concerns raised in particular quarters, consisting of by a proxy advisory firm, would ultimately see personal equity major Carlyle group taking control of PNB Housing Finance, which is a subsidiary of Punjab National Bank.The business's conference is set up for Tuesday (June 22) to take up the matter for approval of the shareholders.

The current resolution bearing product no.

1 (problem of securities of the company and matters associated therewith) of EGM notification dated May, 31, 2021 is ultra-vires of AOA and will not be acted upon till the company carries out the assessment of shares as prescribed under 19( 2) of AOA, for purpose of preferential allotment, from an independent authorized valuer according to the arrangements of suitable laws, PNB Real estate Finance stated in a late night filing referring to Sebi letter to guarantee compliance.The company, promoted by PNB, said it had gotten the letter from Sebi on June 18, 2021, hiring the business to comply with the legal arrangements in the matter.The said report shall be thought about by the business's board while selecting the preferential concern of shares and warrants, Sebi has asked.

The company and its board of directors have considered the Sebi letter, and continue to believe that the company has actually acted in compliance with all appropriate laws, including the appropriate rates guidelines recommended by Sebi, and the AOA of the business, which such preferential allotment is in the best interests of the business, its shareholders and all relevant stakeholders, PNB Real estate Finance said in the filing.The company is assessing further actions in this regard, it added.Proxy advisory firm Stakeholders Empowerment Solutions (SES) in its report has raised a variety of questions on the proposed offer, wondering if Punjab National Bank (PNB) has willingly given up control without extracting a reasonable compensation.The offer is ultra vires to the AoA, it added.Under the proposed offer, Rs 3,200 crore is to be raised through equity shares and Rs 800 crore by issuance of warrants.Notably, PNB Real estate Finance has not raised any equity capital in the past 3 years, other than equity shares issued under the staff member stock option plan.Earlier in February this year, the Reserve Bank had rejected PNB's proposition for a capital infusion into its subsidiary PNB Housing.The business had wished to raise tier I capital as much as Rs 1,800 crore through different modes, including qualified institutional positioning (QIP), preferential issue of shares or a rights issue.Under the proposed offer, an overall of 8.21 lakh equity shares and 2.05 lakh warrants are to be issued at a concern rate of Rs 390 per share/warrant to Pluto Investments S.a.r.l (Pluto) (Carlyle Group); Salisbury Investments (individual acting in performance with Carlyle); General Atlantic Singapore Fund FII Pte Ltd and Alpha Investments V Pte Ltd.Salisbury Investments is the household financial investment lorry of previous HDFC Bank CEO Aditya Puri, who is also a senior advisor for Carlyle in Asia.As per the proposal, the deal will alter the control of PNB Housing Financing-- from PNB being the sole promoter of the business to a joint control holder with Carlyle Group.With this, PNB's stake in the business will come down to 20.28 per cent from the existing 32.64 per cent, while that of Carlyle will increase to 50.16 per cent from 32.21 per cent.




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