SAT fails to resolve Sebi-PNB Housing Finance row over Carlyle funds
11 August 2021
The Securities Appellate Tribunal has failed to resolve the tussle between PNB Housing Finance and market watchdog Securities and Exchange Board of India (Sebi) over the proposed Rs4,000 crore-investment by Carlyle Group, a as the two-member tribunal came up with opposing views, a development that will continue to keep the housing finance company fund-starved.
In the absence of a clear verdict, the tribunal said its interim order passed in June, wherein the PNB Housing Finance was restrained from disclosing the results of shareholders' voting on the deal, would continue.
The Rs 4,000 crore deal with Carlyle was arrived at in February this year, after majority shareholder Punjab National Bank expressed its inability to infuse funds. If the deal had come through the buy-out fund would have acquired controlling stake in the lender in May.
PNB Housing Finance is likely to move the Supreme Court since the tribunal did not provide a clear verdict on the way forward for the deal.
The proposed transaction has been contested by Sebi over valuation of shares and PNB Housing Finance had moved the tribunal against the regulator's directive passed in June.
Sebi had challenged the PNB-Carlyle deal and had asked the company to stall it until it undertook an independent valuation.
PNB Housing Finance challenged SEBI's orders in the SAT, questioning its authority to make such interventions.
SEBI questioned the deal after an institutional investment advisory firm said it was unfair to minority shareholders.
The two-member Securities Appellate Tribunal (SAT) bench of Justice Tarun Agarwala and Justice M T Joshi has delivered a split verdict on the matter. This means that the fate of the deal, which will see infusion of funds into PNB Housing Finance, remains uncertain at least for now.
'In view of the difference of opinion between the members of the bench 'we direct the interim order dated 21st June, 2021 to continue till further order,' the tribunal said in a 56-page order on Monday.
While the transaction was cleared by PNB Housing Finance's board, it came under the lens of the Securities and Exchange Board of India (Sebi) after a proxy advisory firm raised red flags saying the deal was not in favour of the minority shareholders as well as Punjab National Bank, and about certain corporate governance issues.