In a breakthrough moment, the share of PNB Housing Finance has recovered 90% in just five days and has been reigning at the upper circuit level since the 31st of May 2021. This happened after the board members of the Company agreed to raise the credit by Rs 4,000 crore from Carlyle Group, a US-based company. Carlyle Group is an American multinational private equity, financial services, and alternative asset Management Company. It is specialized in corporate private equity, private credits, and real assets.
On Friday, the stock gained 10 percent and settled at Rs 880. It climbed further 5 percent on the 7th of June, Monday, and has set an all-new 52-week high record of Rs 880 from Rs 440 in just a week. This is a piece of good news for the long-term investors, this can be a unique turn-around story in this particular sector, that is Housing Finance. Though experts inform that there might be some instability in the near term, it will basically give positive outcomes for the long-term investors (they are the ones who are generally ready to take on more risk for higher rewards).
Further, Carlyle and its affiliated funds are all set to invest up to Rs 3,185 crore in the housing finance company through a Preferential Allotment of equity shares and warrants. Preferential Allotment can be made only for equity shares or for securities that are easily convertible into shares. Carlyle, along with Salisbury Investments (U.K.-based) will further make an open offer for a 26% stake in the company.
This landmark move by PNB and clearance of around Rs 4,000 core of capital infusion through the preferential share and warrants would help PNB Housing Finance’s market share in the affordable housing and self-employed market categories. PNB Housing Finance has always been on the search for capital and to reduce the promoter’s stake in the business. PNB will continue to function as a promoter (an organization or individual that helps in raising money for some investment activity) and a key shareholder of the home finance firm.
The share price of PNB Housing is yet not satisfactory. Especially, after the PNB Scam, the share prices had fallen and the prices are still struggling to reach a high. The shares are still trading at half their best price of Rs 1,634 that hit in September 2017.
In November 2020, Aditya Puri who was the CEO of HDFC Bank joined Carlyle’s group as a senior adviser. He is expected to take up the board position as the nominee of Carlyle.