Carlyle To Raise Stake As PNB Housing Finance Mops Up Rs 4,000 Crore

A clutch of investors led by a Carlyle entity will invest Rs 4,000 crore in PNB Housing Finance Ltd., adding to the private equity group’s existing investment in the company and making it the largest shareholder.

In February, BloombergQuint reported that the Reserve Bank of India had stopped public-sector lender Punjab National Bank from participating in a proposed Rs 1,800 crore fund raise by PNB Housing Finance as the regulator preferred the lender use available capital for its own needs first. The regulator had written to the lender saying that PNB Housing Finance should raise funds from the open market (external investors) rather than approach its parent, people familiar with the matter had said.

PNB Housing Finance currently has a capital adequacy ratio of 18.7%, which will rise to 28% post the transaction. Its gearing, presently at 6.7x, will reduce to below 5x. The gearing is a ratio of owner equity to funds borrowed by the company.

The fund raise, according to the exchange filings, will allow the company to increase focus on the fast growing affordable housing finance market. It will also allow for expansion of the existing business directly and via co-origination models.

PNB Housing Finance is the fourth largest housing finance company in India in terms of loan assets, which stood at Rs 62,255 crore as of March 31, 2021. It holds deposits worth Rs17,129 crore.

For the year ended March 31, 2021, PNB Housing Finance reported a net profit of Rs 930 crore compared to Rs 646 crore a year ago. It’s gross non performing assets ratio, as on March 31, 2021, was at 4.44% as against 2.75% as on March 31, 2020. The net NPA ratio was at 2.43% as against 1.75% as on March 31, 2020.

“This fund raise, and Carlyle’s continued support, puts us in a strong position to benefit from the growing opportunities in the housing finance sector including in the affordable housing loans and self-employed segments, where we have developed differentiated capabilities in terms of distribution, underwriting and customer service,” Hardayal Prasad, chief executive of PNB Housing said in the press release announcing the investment.

“This substantial additional investment reflects Carlyle’s strong commitment to India as a core market. We look forward to continuing our partnership with a leading bank like PNB to support the company as it embarks on a new growth journey,” Sunil Kaul, managing director of Carlyle Asia Advisory team said in the release.