PE giant Carlyle’s long shadow over its buyout target in India

On Monday, PNB Housing Finance got a go-ahead from the Securities Appellate Tribunal (SAT) for a conclave of shareholders scheduled on Tuesday for a vote on its controversial proposal to allot shares worth some ₹4,000 crore to a clutch of investors led by The Carlyle Group, a US-based private equity major. But India’s fourth biggest mortgage lender must not declare results till the Tribunal has its final say. The lender had appealed against an 18 June directive from the Securities and Exchange Board of India (Sebi), which demanded an independent valuation of its equity before it sought a wide shareholder nod for the preferential allotment. As Sebi saw it, the lender’s board resolution on the deal was an overstretch of the authority granted by its own Articles of Association, but the company denied any violation of norms, arguing that it had got its shares valued and the offer was in the best interest of all stakeholders. This last assertion, however, has been contested. As the deal in question would give its allottees management control of PNB Housing Finance, its offer price of ₹390 per share attracted allegations of a cheap sell-out, and this is reason enough for the case to merit a closer look.