“I would not be able to comment on the large shareholders, or any of the entities who would like to come about in terms of the capital raise and what would happen,” chief executive Hardayal Prasad told analysts during a customary earnings call last week.
The Reserve Bank of India (RBI) did not allow PNB to infuse capital in the mortgage lender in February. After this, PNB Housing began to explore the idea of selling shares through qualified institutional placement (QIP), setting aside the earlier rights issue plan.
“After the permission was not given, we have initiated the process of evaluating all options and modes for fund raising. But we could not actually actively engage with everyone because of a silent period,” Prasad told analysts.
Some minority shareholders, however, have raised doubts. “What was it doing between February and April? The silent period starts 14 days prior to announcement of the quarterly result,” one of them said. PNB Housing announced its fourth quarter results on April 27.
The mortgage lender has been talking about raising equity since the middle of 2019.
Prasad said that the company would begin the fundraising process soon after the end of the silent period.
The lender’s capital to risk weighted assets ratio (CRAR) was at 18.73% at the end of March 2021, falling from 20.06% a quarter ago. It needs funds to reduce leverage and accelerate growth.
“Over the past year, the company has consciously slowed its loan growth and focused on higher down-selling to address the issue of high leverage. Leverage
has now fallen to levels of about 7x and the decline is likely to continue,” Motilal Oswal said in a note.
Its loan assets saw an 8% drop to Rs 62,256 crore at the end of FY21 from Rs 67,571 crore a year back, while gross non-performing assets ratio rose to 4.44% at the end of March as against 2.75% a year back.
ET had in March reported that the Carlyle Group and two other large existing investors had hired consultants to carry out due diligence on PNB Housing Finance’s books, supposedly to review capital infusion plans. The Carlyle Group holds 32.22% in PNB Housing through a group company called Quality Investment Holdings.
“It’s important for us to have a medium-term solution for raising capital to support our growth plans,” Prasad had told ET in January.