PNB Housing Finance EGM: Minority shareholders lack votes to halt Carlyle deal; PNB vote critical

Hoarding of PNB Housing Finance at a branch in Delhi's Connaught Place. (Source: ShutterStock)

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26 Aug, 2025 12:21

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PNB Housing Finance’s EGM on June 22 to decide on the much-debated Carlyle transaction could be a no-show for minority shareholders, which lack the votes to block the deal even if they wanted to, and promoter Punjab National Bank’s stance would be crucial.

The EGM will take up a special resolution on approving a preferential allotment of shares to Carlyle and other investors and needs approval from 75 percent of those present and voting. The parties to the deal are PNB and private equity firms Carlyle, General Atlantic and Ares SSG, which own an 85 percent stake in PNB Housing.

PNB alone owns 32.64 percent in PNB Housing and if minority shareholders want to block the deal, they need PNB to back them. The deal proposes the sale of shares and warrants to private equity firms that together own a 52 percent stake in PNB Housing to raise Rs 4,000 crore. Carlyle holds 32.21 percent, General Atlantic 9.86 percent and Ares SSG 9.92 percent.

JN Gupta of proxy advisory firm Stakeholders Empowerment Services had said that Carlyle, which will get a majority stake in the housing finance company if the planned deal goes through, should have recused itself from the voting for a fair play.

SES has questioned the deal, calling it a transaction at a “depressed valuation,” especially when control would be passed on to the PE firm.

The Securities and Exchange Board of India had asked PNB Housing to halt the preferential allotment of shares because it would violate the company’s articles of association. After appealing in the Securities Appellate Tribunal, PNB Housing got the go-ahead for the EGM on the condition that the results of the voting would be withheld until the tribunal decides on the matter.

The tribunal has asked SEBI for its response by June 26 and will take up the matter on July 5.

The minority shareholders of PNB Housing are not party to the proposed transaction and lack enough votes to swing a decision. The ball is clearly in the tribunal’s court for this deal.