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Why PNB Housing Finance shares hit upper circuit today

Why PNB Housing Finance shares hit upper circuit today

Sebi had asked the firm not to go ahead with its Rs 4,000-crore capital raise plan led by the Carlyle group. The capital markets regulator restrained the housing finance company from going ahead with shareholders' voting on the deal, directing the company to conduct the valuation process as per the relevant applicable legal provisions.

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Shares of PNB Housing Finance were locked in a 5 per cent upper circuit after the company announced that its promoter Punjab National Bank has asked it to consider restructuring the proposed Rs 4,000 crore capital infusion deal led by US-based Carlyle group.
 
"The PNB letter had conveyed a decision taken by the board of directors of PNB at their meeting held on July 3, 2021," PNB Housing Finance said in a regulatory filing.
 
"The board of directors of the company should take cognizance of the directive issued by Sebi vide their letter dated June 18, 2021, and reconsider restructuring the contours of the deal/transaction of the capital raising in line with such Sebi directive," it added.
 
PNB Housing Finance also said it will await the Securities Appellate Tribunal's order on the issue before taking a final decision.
 
The stock opened 2 per cent higher at Rs 699.95 against the previous close of Rs 686.25 on BSE. Market cap of the firm rose to Rs 12,141.89 crore. It has gained 233 per cent in the last one year and risen 98 per cent since the beginning of this year. PNB Housing stock stands higher than 5 day, 20 day, 50 day, 100 day and 200 day moving averages.
 
Sebi had asked the firm not to go ahead with its Rs 4,000-crore capital raise plan led by the Carlyle group. The capital markets regulator restrained the housing finance company from going ahead with shareholders' voting on the deal, directing the company to conduct the valuation process as per the relevant applicable legal provisions.
 
The deal, which came under SBI and RBI's lens, following concerns expressed in certain quarters, including by a proxy advisory company, would ultimately see US-based private equity giant Carlyle Group taking control of PNB Housing Finance, a subsidiary of Punjab National Bank.
 
However, the company had moved the Securities Appellate Tribunal (SAT) after the Sebi letter. The matter is scheduled for hearing on Monday, July 12.
 
Following PNB's letter, the board of the housing finance firm, by a majority resolution passed on July 6, decided that since the issue relates to the interpretation of the law and is sub-judice before the Securities Appellate Tribunal, it will await SAT's order on the matter.
 
The order in the matter was expected to come on July 5. However, the company sought the same to be heard next week.
 
The deal was announced on May 31, 2021. Pluto Investments, an affiliated entity of Carlyle Asia Partners IV, L.P. and Carlyle Asia Partners V, L.P. (together Carlyle) agreed to invest up to Rs 3,185 crore through a preferential allotment of equity shares and warrants at a price of Rs 390 per share.