Carlyle to Invest Rs 4000 Crore in PNB Housing Finance

PNB Housing Finance Ltd said its board of directors has approved a capital raise of up to Rs 4,000 crore led by entities affiliated to Carlyle Group Inc.

The key objective is to augment capital adequacy, reduce gearing and accelerate growth with a focus on retail housing including self-employed and affordable housing loans like the Unnati segment.

Pluto Investments Sarl, an affiliated entity of Carlyle Asia Partners IV LP and Carlyle Asia Partners V LP, has agreed to invest up to Rs 3,185 crore through a preferential allotment of equity shares and warrants at a price of Rs 390 per share.

Existing shareholders of the company, funds managed by Ares SSG and General Atlantic are also participating in the capital raise. PNB will continue to be the promoter and a key stakeholder in the company.

As part of the transaction, Salisbury Investments Pvt Ltd -- the family investment vehicle of Aditya Puri who is Senior Advisor for Carlyle in Asia -- will also invest in the capital raise. Puri is expected to be nominated to the PNB Housing Finance Board as a Carlyle nominee director in due course.

Established in 1988, PNB Housing Finance is the fourth largest housing finance company in India in terms of loan assets (Rs 62,255 crore as of March 31) and the second largest in deposits (Rs 17,129 crore).

Favorable demographics, rising urbanisation, lower interest rates, continued improvement in housing affordability and supportive government policies are promoting growth across the industry which is expected to continue into the near future.

Assuming full capital infusion including warrants and no other change to financials, PNB Housing Finance's capital adequacy ratio will increase from 18.7 per cent to over 28 per cent and gearing as of March 31 will decline from 6.7x to less than 5x.

Hardayal Prasad, Managing Director and CEO of PNB Housing Finance, said the fundraise and Carlyle's continued support puts the company in a strong position to benefit from growing opportunities.

"The current fund raise and planned strengthening of the board and management team will enable us to accelerate our strategic priorities including further expanding our footprint, driving the company's digitalisation, improving our operating model and customer engagement," he said in a statement.