PNB calls off deal to sell stake in PNB Housing Finance, to remain sole promoter
BusinessToday.In May 16, 2019
Punjab National Bank (PNB) on Thursday called off a deal to sell stake in its housing finance arm to global private equity firms General Atlantic and Varde Partners.
The PNB informed that post termination of the share purchase agreement (SPA), it will continue to be the sole promoter of the company and stay strategically invested in the company.
"PNB and Varde have mutually agreed to terminate the SPA, and all rights and obligations of the parties there under with immediate effect," PNB Housing Finance said in a filing to the Bombay Stock Exchange.
On March 29, the state-owned lender had entered into agreements to sell 10.89 crore equity shares, or 13.1 per cent stake, in PNB Housing Finance to General Atlantic Group and Varde Partners at a share price of Rs 850 per share, aggregating to Rs 925.80 crore.
PNB believes in the growth story of PNB Housing Finance, and will continue to support its business and management in pursuing their growth plans, it said in its statement.
The public sector lender, which holds 32.79 per cent stake in the company, also assured that it will continue to provide branding support as long as it remains the promoter of the company.
The stake sale was part of PNB's strategy to raise fund through divestment of stake in non-core assets. The bank had set a target to raise up to Rs 8,600 crore by selling stake in its non-core assets by the end of March 31, 2019.
The global rating agency Moody's had said that the stake sale is credit positive for the bank as it will strengthen its capital.
The stake sale will provide support to bank's capitalisation, which has been challenged by high credit costs and investment losses, in addition to the negative effect of fraudulent transactions PNB discovered between February and March 2018, Moody's had said in a report.
Edited by Chitranjan Kumar