PNB Housing Finance stock hits lower circuit after firm cancels Rs 4K-crore Carlyle deal

PNB Housing Finance share was stuck in the lower circuit of 5 per cent today after the arm of state-owned lender Punjab National Bank said it has shelved its share sale plan to US-based private equity firm Carlyle Group and others.

The share opened with a loss of 5 per cent today. Later, it was stuck in the lower circuit of 5 per cent at Rs 607.10 against the previous close of Rs 639.05 on the Bombay Stock Exchange (BSE).The mid cap stock has lost 6.62 per cent in the last 2 days .

The stock trades higher than 200 day moving averages but lower than 5 day, 20 day, 50 day, and 100 day moving averages. The share has gained 68.45 per cent in one year and risen 66.6 per cent since the beginning of this year.

Market cap of the firm fell to Rs 10,234 crore on the BSE. Total 8,031 shares of the firm changed hands amounting to turnover of Rs 48.76 crore on BSE.

PNB Housing Finance last week said it had aborted Rs 4,000-crore share sale plan to US-based private equity firm Carlyle Group and others.

"At a meeting held today, the board has decided not to proceed with the preferential issue and the share subscription agreements executed with the proposed allottees have been terminated in accordance with their respective terms," the firm said on October 14.

The board's primary objective is to raise capital to support the growth of the company, and the board believes that the current situation is not in the best interests of the company and its stakeholders, it said.

The deal was stuck in legal tangles on the matters of valuation. The capital markets regulator Sebi last month approached the Supreme Court against the Securities Appellate Tribunal's order in the matter related to the company's Rs 4,000 crore equity capital raise plan. The matter is pending before the apex court.

Under the proposed deal, Pluto Investments, a subsidiary of Carlyle, and Salisbury Investments Pvt Ltd were to acquire an equity stake in PNB Housing Finance, where state-owned Punjab National Bank holds a little over 32 per cent stake.

Salisbury is a non-banking finance company and is primarily engaged in the business of making investments in financial securities. It is a family investment vehicle of Aditya Puri, senior advisor for Carlyle in Asia and the former CEO and MD of HDFC Bank.

Meanwhile, ICICI Securities has given a sell call on PNB Housing Finance with a target price of Rs 485. Time period for the call is one year.

"With proposed deal being off the table, the overhang resurfaces with respect to promoters' stake  (PNB and Carlyle).  Also, what initiatives are now being taken to strengthen governance and Board will be key," the brokerage said.