Punjab National Bank’s housing finance wing PNB Housing Finance has received acquisition bids from about seven companies in a deal estimated to be around $2.3 billion (more than Rs.16,600 crore). According to Economic Times, some of the bidders who have made initial offers for the purchase include Dewan Housing Finance, Godrej, Bandhan Bank, etc.
It is expected that the bids submitted for this deal will be opened later this week. As of now, sources indicate that the bids received for the deal might have come at a premium of nearly 10% to 12% of the company’s current trading price. Shares of PNB Housing Finance closed yesterday (Tuesday) at Rs.1,303.35 per share with a market capitalisation of over Rs.21,700 crore.
This deal is seen as a crucial part of PNB’s turnaround strategy. India’s second-largest lender aims to raise about Rs.7,000 crore to Rs.8,000 crore through the sale of its shares in the housing finance company. According to sources, certain bidders have even made all-cash offers for the deal.
PNB currently owns about 32.8% of PNB Housing Finance. Private equity firm Carlyle Group owns a little over 33% of the company’s shares. Apart from this, foreign institutional investors hold over 18% stake in the company. The rest is distributed among banks, mutual funds, financial institutions, and the general public.
A month ago, 13 companies expressed interest in buying PNB Housing Finance. However, a few players dropped out of the bidding process citing the high cost of the deal and uncertain economic outlook. Sources also indicate that some players are looking for strategic partners to proceed with the deal. This might get finalised as the deal progresses.
PNB is currently in the process of raising capital in a bid to turnaround its performance after the pile of non-performing assets. The bank is also looking forward to liquidate some of its assets to raise capital. Last month, the bank revealed its plans to sell its old headquarters to the tax department in a deal valued at Rs.1,000 crore.
Source: Economic Times