PNB Housing Finance Surges Over 100% in Nine Sessions on Carlyle’s Fund Infusion

PNB Housing Finance Surges Over 100% in Nine Sessions on Carlyles Fund Infusion

Shares of PNB Housing Finance Ltd have surged over 100% in the last nine trading sessions following the announcement by US private equity giant The Carlyle Group and banking veteran Aditya Puri to invest in the firm.

The stock was currently trading at ₹880.56. It has surged 118% since 25 May.

A consortium of investors, led by The Carlyle Group and former HDFC Bank Ltd chief executive Aditya Puri, will invest ₹4,000 crores in PNB Housing Finance Ltd. The capital infusion will make Carlyle the largest shareholder in PNB Housing.

Carlyle will invest as much as ₹3,185 crores through affiliate Pluto Investments via a preferential allotment of shares and warrants at ₹390 apiece. Existing shareholders, including a fund managed by Ares SSG, will invest ₹400 crores, and private equity firm General Atlantic will invest ₹390 crores.

Puri’s family investment vehicle, Salisbury Investments Pvt. Ltd will invest ₹25 crores as part of the transaction.

Puri, who joined The Carlyle Group as a senior adviser in November after retiring from HDFC Bank, is expected to be nominated to the board of PNB Housing as the private equity firm’s nominee director, said a statement by the PNB Housing.

According to ICICI Securities, Aditya Puri’s nomination to the Board will lend considerable credence to the company’s business transition and strategic intentions.

“The announced large equity infusion should significantly improve the confidence of fixed income and equity markets and bring PNBHF back on a growth path. We believe this capital infusion could materially accelerate the business turnaround,” said Morgan Stanley in a report to its investors. The brokerage firm has upgraded the stock to Overweight

Carlyle is an existing investor in the mortgage financier, owning a 32.21% stake through group firm, Quality Investment Holdings. Punjab National Bank holds 32.64% currently.

The fresh investment by Carlyle, on a fully diluted basis, will give the PE firm a 30% stake, while it’s existing holding through Quality Investments will decline to 19.9%. Punjab National Bank’s stake will fall to 20.28%.

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