PNB Housing Finance Surges Over 40% In Two Sessions. Here's Why

PNB Housing Finance will raise Rs 4,000 crore from The Carlyle Group.
PNB Housing Finance will raise Rs 4,000 crore from The Carlyle Group.

Shares of the country's leading mortgage lender - PNB Housing Finance - were locked in 20 per cent upper circuit for second session in a row on Tuesday at fresh 52-week high of Rs 630.20. In the last two trading sessions the stock has gained 44 per cent after the company informed exchanges on Monday that its board has approved raising Rs 4,000 crore from the entities of US-based The Carlyle Group.

"Pluto Investments S.a.r.l., an affiliated entity of Carlyle Asia Partners IV, L.P. and Carlyle Asia Partners V, L.P. (together, "Carlyle") has 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. Existing shareholders of the company, funds managed by Ares SSG and General Atlantic, are also participating in the capital raise. PNB will continue to be the promoter and a key stakeholder in the company," PNB Housing Finance said in a press release.

As part of the investment, Salisbury Investments, the family investment vehicle of Aditya Puri, former CEO & Managing Director of HDFC Bank and Senior Advisor for Carlyle in Asia will invest in the fund raising.

Aditya Puri is expected to be nominated to the PNB Housing Finance Board as a Carlyle nominee Director in due course. Over his 26 year tenure leading HDFC Bank, Mr. Puri grew HDFC Bank into the largest private sector bank in India and has been recognized globally as one of the world's leading businesspersons.

"I believe PNB Housing Finance with its enhanced capital base is very well positioned to meet the growing demand in its areas of operation. I look forward to helping the Company in this exciting journey," Mr Puri said in a statement.

"The key objective of raising capital is to augment capital adequacy, reduce gearing and accelerate growth with a focus on retail housing including self-employed and affordable housing loans such as the Unnati segment. Assuming full capital infusion (including warrants) and no other change to the March 31, 2021 financials, the capital adequacy ratio of the Company as of March 31, 2021 would increase from 18.7 per cent to over 28 per cent and gearing as of March 31, 2021 will decline from 6.7 times to less than 5 times," PNB Housing Finance added.

As of 2:33 pm, PNB Housing Finance shares were locked in 20 per cent upper circuit at Rs 630 with pending buy orders of over 4 lakh shares.