SAT delivers split verdict on PNB Housing Finance-Sebi tussle

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Securities Appellate Tribunal (SAT) delivered a split verdict on the tussle between PNB Housing Finance and markets watchdog Securities Exchange Board of India (Sebi) over the proposed Rs 4,000 crore investment by Carlyle Group. The development will keep the much-needed deal for the funds-starved lender in limbo. The tribunal also said that its interim order passed in June, wherein the PNB Housing Finance was restrained from disclosing the results of shareholders’ voting on the deal, would continue.

On May 31, PNB Housing Finance announced the deal of Rs 4,000 crore capital infusion led by existing investor US-based Carlyle group, alongside a clutch of other investors, by way of issuing shares and warrants.

The Rs 4,000 crore deal, stitched together after majority shareholder Punjab National Bank expressed its inability to infuse funds in February this year, that would see investment major Carlyle Group taking control of the lender was announced in May. The proposed transaction has been contested by Sebi over the valuation of shares and PNB Housing Finance had moved the tribunal against the regulator’s directive passed in June.

SAT’s verdict

The two-member Securities Appellate Tribunal (SAT) bench of Justice Tarun Agarwala and Justice M T Joshi has delivered a split verdict on the matter. This means that the fate of the deal, which will see the infusion of funds into PNB Housing Finance, remains uncertain at least for now.

“In view of the difference of opinion between the members of the bench “we direct the interim order dated June 21, 2021 to continue till further order,” the tribunal said in a 56-page order.

In the interim order issued on June 21, SAT said that no factual dispute exists and only an interpretation of the provisions of the ICDR (Issue of Capital and Disclosure Requirements) Regulations and Companies Act read with Articles of Association is required to be considered.

While the transaction was cleared by PNB Housing Finance’s board, it came under the lens of the Sebi after a proxy advisory firm raised red flags saying the deal was not in favour of the minority shareholders as well as Punjab National Bank and had certain corporate governance issues.

There were no immediate comments from PNB Housing Finance on the verdict, the matter is likely to move to the Supreme Court since the tribunal did not provide a clear verdict on the way forward for the deal. The stock of PNB Housing Finance declined over 2% to close at Rs 692.55 apiece on BSE.