PNB Housing Finance to raise up to Rs 2,500 cr via rights issue

PNB Housing Finance (PNB HFC) plans to raise up to Rs 2,500 crore in equity by issuing shares through rights issue to meet capital adequacy norms and support business growth.

Its board gave a nod for the proposal to raise capital at a meeting held today. It would communicate issue price, entitlement ratio and timing in due course, the company informed the stock exchanges. On Wednesday, its stock closed 0.6 per cent higher at Rs 420.35 per share on BSE.

Its capital adequacy ratio (CAR) stood at 21.59 per cent with tier I of 18.9 per cent at end of December 2021.

In October 2021, PNB HFC dropped plans for a preferential issue of equity shares to raise Rs 4,000 crore from a group of investors led by private equity fund Carlyle. The protracted litigation and uncertainty over approvals led to calling off the deal.

Public sector lender Punjab National Bank, as promoter, held 32.57 per cent stake in the HFC at end of December 2021.

Last week, India Ratings had flagged risks from elevated delinquency levels at PNB HFC and said it was essential for mortgage lender to raise equity capital to maintain adequate buffers to absorb credit costs. It affirmed “AA” rating on non-convertible debentures issued by the company and maintained a negative outlook.

Raising equity capital would strengthen PNB HFC’s position in mobilising cost-effective liability, aiding in competitive pricing of loans. Although deleveraging has reduced the financial risk, the asset-side risk remains elevated, the rating agency said.

PNB HFC witnessed a decline in the loan portfolio since FY19 due to the company’s conscious decision of reducing its wholesale portfolio, Covid-led operational disruptions, and stiff competition from banks. Its assets under management (AUM) declined to Rs 66,539 crore in December 2021 from Rs 74,469 crore in March 2021 and Rs 83,346 crore in March 2020.