‘No judgement error in PNB Housing deal’
NEW DELHI: Asserting that there was no error of judgement with regard to the fund infusion decision of PNB Housing Finance, Punjab National Bank (PNB) managing director SS Mallikarjuna Rao on Tuesday said the future course of action would depend on the SAT’s order.
The Securities Appellate Tribunal (SAT) after hearing all parties related to PNB Housing Finance-Carlyle deal has kept its order reserve. PNB currently holds a 32.6% stake in the housing finance firm.
Under the deal announced on May 31, the US-based Carlyle, alongside other investors, is slated to infuse ₹4,000 crore capital into PNB Housing Finance through the issuance of preference shares and warrants.
However, the deal has come under the scanner of capital markets regulator Sebi. The company was directed to carry out the valuation process of shares as per the relevant legal provisions.
PNB Housing contended that it has followed Sebi norms in deciding the issue price at ₹390 apiece.
Defending the stance taken at the PNB Housing Finance Board meeting on May 31, Rao said, “There was no error of judgement. If you have seen the share price of PNB Housing Finance in the last 2-2.5 years, it was hovering at below rate. ICDR guidelines clearly indicate the kind of formula to be used for pricing for listed entities.
“As on the date of taking a decision, it would never have been thought by anyone of us that the price would increase so high in the subsequent days based on the decision taken by the company. So, there was no error of judgement.”
With the difference of opinion between Articles of Association (AoA) clause and ICDR guidelines, he said many of the issues have been cleared or have moved forward strictly based on Issue of Capital and Disclosure Requirements (ICDR) guidelines.
When PNB Housing Finance consulted the legal firms, he said, there was an opinion that the ICDR guidelines prevail.
Separately, PNB also sought an opinion where an eminent lawyer said there may not be any conflict of interest between the clause in AoA and ICDR guidelines, he said.
“So when a legal provision, the interpretation could be different based on legal opinion. However, the interpretation will be put to rest by judiciary, quasi-judiciary or regulator. We await the judgement by SAT for any implementation and we will be following that in letter and spirit,” he said.
Clarifying on PNB’s direction to PNB Housing Finance on July 4 to consider restructuring the proposed ₹4,000 crore capital infusion deal led by US-based Carlyle group, Rao said, after discussion at PNB Board taking into account various factors, PNB Housing Finance was asked to clearly follow the Sebi guidance.
“It is not the question of going diametrically opposite of what we have done. We have only told them that the Sebi communication may be looked into in terms of reconstruction of the entire process. Now it is in the SAT’s domain for giving a final judgement and we are all bound to follow the judgement,” he said.
PNB Housing Finance shares were trading at ₹681 apiece, up 0.23% on BSE during afternoon trade.