PNB Housing Finance Board Approves Rights Offering

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On Wednesday evening, the board of PNB Housing Finance Company Ltd (PNBHFL) approved a fundraising of up to ₹2,500 crore via a rights issue.

Detailed terms of the rights issue, including issue price, rights-to-rights ratio, record date and timing, will be determined in due course, PNBHFL said in a filing to the stock exchanges. On Wednesday, PNBHFL share price closed up 0.6% at ₹420.35 per share on the Bombay Stock Exchange (BSE).

Regulatory obstacle encountered

It may be recalled that PNBHFL was forced last year (in October) to cancel its ₹4,000 crore fundraising plan involving Carlyle Group and other high profile investors. PNBHFL’s ₹4,000 crore preferential issue to private equity firm Carlyle and other investors had hit a regulatory hurdle last year over the pricing of the preferential issue.

As of December 31, 2021, the Punjab National Bank (PNB) held 32.57% of the capital of PNBHFL.

“AA” rating for the NCD of the PNBHFL

Last week, India Ratings flagged risks from high levels of delinquency at PNBHFL and noted that it was essential for the housing finance company to raise equity to maintain adequate buffers to absorb credit costs. . It also affirmed the “AA” rating of non-convertible debentures issued by the company and maintained a negative outlook.

PNBHFL’s assets under management (AUM) fell to ₹66,539 crore in December 2021 from a level of ₹74,469 crore in March 2021 and ₹83,346 crore in March 2020.

PNBHFL transformed into a retail-focused home loan provider and had taken a call to pull out of business operations. In the past two years, the company had reduced its corporate book by ₹12,000 crore, and this is one of the reasons why its overall assets under management (AUM) had decreased.

PNBHFL had a capital adequacy ratio of 21.59% and Tier I capital of 18.9% at the end of December 2021.

Published on

March 10, 2022

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