After shelving the sales plan for about two months, India’s second-largest, public-sector lender Punjab National Bank (PNB), has revived the process to sell its 33% stake in PNB Housing Finance. The bank has appointed PNB Investment Services and Credit Suisse to scout for new investors in this divestment process. This deal is considered to be a major part of PNB’s turnaround strategy as it is expected to bring in about Rs.5,200 crore for the bank.
A senior executive of the bank spoke to Economic Times stating that PNB has sought expressions of interest from interested buyers. The right buyer will be decided through a bidding process. The bank is also looking forward to selling its stake in various other organisations like CRISIL, BSE, and ICRA. These actions are taken mainly to raise liquidity and comply with regulatory norms.
Private equity firm, Carlyle Groups, owns another 33% stake in the company. Previously, both PNB and Carlyle Group had initiated a joint effort to divest the entire 66% stake in PNB Housing Finance. However, the plan was shelved following the value erosion faced by various housing finance companies in the industry.
There are about 20 companies that expressed their interest in the past for buying PNB’s stake in the housing finance wing. Some of the top firms include Dewan Housing Finance, Godrej, Blackstone, Indiabulls, etc. With this renewed divestment process, these firms are likely to compete with each other for acquiring PNB’s stake in PNB Housing Finance.
PNB Housing Finance’s loan disbursements have been expanding by more than 40% over the last few years. Total assets under management (AUM) at the end of September 30, 2018 stood at Rs.73,482 crore.
In September, PNB Housing Finance received acquisition bids from about seven companies in a deal that valued the company at over Rs.16,000 crore. The company has been engaging in various strategies for the last few months to raise capital.
Source: Economic Times