PNB Housing Finance denies reports of stake sale negotiations, stock up 14% today

Shares of PNB Housing Finance would be happy to know that the stock is up 14 per cent today, and is currently trading at Rs 1,201 apiece. It had ended at Rs 1,071.35, down 3 per cent, on Friday. The stock was reacting to a media report claiming that Housing Development Finance Corp (HDFC) and Kotak Mahindra Bank are vying for a controlling stake in PNB Housing Finance.

In fact, earlier this month, fraud-hit PNB had informed the stock exchange that its board had authorised the management to take the "decision to disinvest in PNB Housing Finance, Icra, Crisil and BSE Ltd", at an "appropriate time depending on market conditions and available options, to implement PSB's reforms agenda dated 24.01.2018 for responsive and responsible PSBs [public sector banks]".

However, earlier today, HDFC made it clear in a regulatory filing that "the Corporation had no meeting with the management of PNB Housing Finance Limited and is not looking to acquire any stake in [it]".

PNB Housing Finance also informed the Exchange that it is not aware of any such negotiations or "information which could explain the upward movement in the stock price/trading".

Citing sources, the daily had claimed that the Punjab National Bank and Carlyle, which together own about 66% of PNB Housing Finance, are looking to sell their stake to a large investor.

It added that the company's third-largest shareholder, General Atlantic, had also been informed about this development. Morgan Stanley has reportedly been appointed as the advisor to the deal by Carlyle.

"HDFC and Kotak Bank met with the management of PNB Housing Finance last week to discuss buying out private equity fund Carlyle's entire stake of around 33% and another 33% on block from PNB," a source had told the Economic Times.

The company has a market capitalisation of Rs 17,939 crore so the deal was expected to fetch the promoters about Rs 6,000 crore each. Carlyle had picked up a 49 per cent stake in the company for Rs 1,600 crore back in February 2015. It recently sold about 5 per cent of its stake in the open market.   

If Kotak Bank goes ahead with such a deal, it will have to make an open offer for an additional stake under takeover rules. Apart from General Atlantic Singapore Fund, PNB Housing Finance investors include Birla Sunlife MF, Motilal Oswal MF, Wasatch, T Rowe Price, Government of Singapore, Fidelity, Invesco, Reliance MF and Nomura Asset Management.

The report added that the company, which listed in November 2016 after a Rs 3,000-crore initial public offer, has seen its market value almost double so far.

With 84 branches across the north, south and west and boasting assets under management of Rs 62,252 crore (at the end of the last fiscal) - and net non-performing loans at 0.25 per cent of the total - investor interest in PNB Housing Finance is understandable.

The country's second largest deposit taking housing finance company has reportedly also been expanding disbursements at a 52 per cent compound annual growth rate over the last four years.