PNB Housing Finance to raise up to Rs 4,000 crore from Carlyle, former HDFC Bank chief Aditya Puri

 PNB Housing Finance, the fourth largest mortgage lender in India by assets, on Monday announced that its board has approved a capital raise of up to Rs 4,000 crore, led by entities affiliated to The Carlyle GroupInc. As part of the transaction, Salisbury Investments, the family investment vehicle of Aditya Puri, senior advisor for Carlyle in Asia and the former Managing Director & CEO of HDFC Bank will also invest in the capital raise, the company said in a notification to the stock exchanges.

Puri is likely to be nominated to the PNB Housing Finance Board as a Carlyle nominee director in due course, the statement said. He retired from HDFC Bank, India's largest private bank by assets, in October 2020, after helming it for 26 years since its establishment.

Pluto Investments, an affiliated entity of Carlyle Asia Partners IV and Carlyle Asia Partners V has agreed to invest up to Rs 3,185 crore through a preferential allotment of equity shares and warrants, at a price of Rs 390 per share. Existing shareholders of the company, funds managed by Ares SSG and General Atlantic, will also participate in the capital raise.

Ares SSG is one of the largest alternative asset managers in Asia-Pacific with approximately US$ seven billion in assets under management as of March 31, 2021. General Atlantic is a leading global growth equity firm providing capital and strategic support for growth companies.

Punjab National Bank (PNB), the country’s second largest public sector bank by assets, will continue to be the promoter in the company. “The transaction is subject to customary regulatory approvals as well as shareholder approval. Pursuant to the Securities and Exchange Board of India’s Takeover Regulations, the proposed transaction will trigger a mandatory open offer by Pluto Investments S.a.r.l. for the purchase of up to 26% equity shares of PNB Housing Finance from public shareholders,” PNB Housing Finance said in the statement.

Established in 1988, PNB Housing Finance had loan assets worth Rs 62,255 crore as of March 31, 2021. It holds the second largest share in deposits among housing finance companies, with deposits of Rs 17,129 crore as on March 31, 2021.

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, the company said. Assuming full capital infusion, including warrants, and no other change to the March 31, 2021 financials, the capital adequacy ratio of PNB Housing Finance as of March 31, 2021 would increase to over 28 per cent from 18.7 per cent and its gearing as of March 31, 2021 will decline to less than 5x from 6.7x.

Hardayal Prasad, Managing Director and CEO of PNB Housing Finance, said, “The current fund raise and planned strengthening of the Board and management team will enable us to accelerate our strategic priorities, including further expanding our footprint, driving the company’s digitalisation, improving our operating model and customer engagement.”

Sunil Kaul, Managing Director of the Carlyle Asia advisory team, said, “We have developed a strong partnership with PNB Housing Finance since our investment six years ago, leveraging our industry expertise and networks to help the company navigate sector headwinds, strengthen its business, and position it for future growth.” The additional investment reflects Carlyle’s strong commitment to India as a core market, he added.