PNB Housing Finance Ltd and 11 directors of the company have settled the Carlyle Group open offer case with the Securities and Exchange Board of India (Sebi) without admission of guilt.
The market regulator had in June 2021 initiated proceedings against the mortgage lender for alleged failure to obtain a valuation report for a preferential sale of its shares to buyout firm Carlyle Group.
Sebi’s high powered advisory committee had in May recommended settlement of the case upon payment of ₹72 lakh, including ₹44 lakh as legal costs. PNB Housing Finance, along with 11 directors, on 15 June settled the case related to the proposed open offer after jointly paying the money to Sebi. Under the mortgage lender’s proposed ₹4,000 crore deal with Carlyle Group, PNB Housing Finance was to make a preferential issue to investors, led by the private equity firm, at ₹390 per share.
The deal came under scrutiny after a proxy advisory firm, Stakeholders Empowerment Services, said that the proposed investment went against the interest of the shareholders of PNB Housing Finance and Punjab National Bank. The deal was struck at a valuation less than the book value and the shares were not valued by an independent agency.
Sebi said the shares were undervalued and an independent valuation must be undertaken before the allotment is put to the vote. It then stopped the EGM which was to consider the issue of shares.
The mortgage lender moved the Securities Appellate Tribunal (SAT) on whether Sebi has the jurisdiction to restrain it from holding the meeting. SAT gave a split verdict in the matter in August last year, following which Sebi approached the Supreme Court.
On 16 October 2021, PNB Housing Finance informed Sebi through an email that it had informed the stock exchanges on 14 October 2021 that its board had chosen not to move forward with the preferential issue. The top court issued an order on 20 October 2021 declaring the appeal as infructuous and dismissing it.
