Shivangi Prakash –
Published on August 10, 2021, at 12:59 IST
The 4,000-crore deal involving PNB Housing Finance Companies privileged allocation of shares to private equity firm Carlyle remains in limbo, with the Securities and Appellate Tribunal (SAT) split on SEBI’s objections.
In an interim decision, SAT prohibited PNB Housing Finance Company from announcing the outcome of the deal’s shareholder vote.
“In view of the difference of opinion between the members of the board we direct the interim order to continue till further orders,” the 56-page order read.
According to Justice MT Joshi, SEBI issued the notification lawfully, and the EGM vote cannot take place until the valuation report is received in accordance with the Articles of Association and presented to the general body of shareholders.
SEBI should not have stopped voting at the EGM, according to Justice Tarun Agarwala, because the PNB board had approved the issuance of shares in accordance with the International Centre for Dispute Resolution (ICDR), and shareholders should have been permitted to vote.
SEBI’s instructions were challenged in the SAT by PNB Housing Finance, who questioned the regulator’s power to intervene.
After an institutional investment advisory firm complained the deal was unjust to minority shareholders, SEBI questioned it.
Both parties have the option of appealing the SAT’s decision to the Supreme Court.
According to legal experts, the matter will now be decided by the Supreme Court. PNB Housing Finance announced in May that a group of investors led by private equity company Carlyle would receive preferential issuance of shares worth 4,000 crores.
The acquisition gives the new investors control of the PNB Housing Finance management.
Carlyle was gaining control of PNB Housing Finance, according to a proxy advisory report by Mumbai-based Stakeholders Empowerment Services (SES), which could result in a loss to minority shareholders.
According to JN Gupta, Managing Director, SES, the ideal approach for PNB to divest its PNB Housing holding is to issue a rights issue and renounce in favour of Carlyle at a market-determined price, allowing retail investors to participate in the transaction.
Click here to Read/Download the Order
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