Värde Partners, General Atlantic’s pacts to invest in PNB Housing fall through

By TEAM VCC

  • 16 May 2019
Credit: 123RF.com

Alternative investment firms General Atlantic and Värde Partners have terminated agreements to buy a 13.1% stake in PNB Housing Finance Ltd for Rs 1,851.6 crore ($268 million) from Punjab National Bank.

The state-run bank said in stock-exchange filings on Thursday that, after the termination of the pacts, it will remain as the sole promoter of PNB Housing and stay strategically invested in the mortgage lender.

The two US-based firms had in March agreed to invest Rs 925.80 crore each in PNB Housing at a price of Rs 850 per share. The mortgage lender’s shares closed at Rs 758.75 apiece on the BSE on Thursday.

The bank said that the agreement with Värde Partners was terminated mutually. The pact with General Atlantic was required to be concluded by May 15 and was contingent upon approvals from the Competition Commission of India, the National Housing Bank and the Reserve Bank of India.

While the competition watchdog and the NHB—which regulates mortgage lenders—approved the transaction, the central bank didn’t approve the transaction. Since all conditions required to be completed by May 15 were not fulfilled, the pact was terminated, the bank said.

PNB said it will continue to support the mortgage lender and its management in pursuing their growth plans. It will also continue to provide branding support till it is the promoter of the company.

The bank owns a 32.79% stake in PNB Housing. General Atlantic is an existing investor in the housing finance firm with a 9.91% stake as on March-end. PNB Housing also counts Carlyle as a major shareholder with a 32.36% stake.

General Atlantic had acquired a stake in PNB Housing when Carlyle made a partial exit in May last year.

PNB, which is still recovering from a $2 billion fraud detected last year, and Carlyle had in July last year initiated a joint process to sell a minimum 51% stake in PNB Housing. Carlyle withdrew from the sale process in November, but the bank decided to independently pursue the sale of its stake.