Punjab National Bank is planning to sell its 22 percent stake in PNB Housing Finance to General Atlantic Partners (GA) and Varde Partners for around Rs 3,500 crore, according to a report by The Economic Times.
PNB owns 32.79 percent stake in its housing finance arm. The bank has decided to hold a 10.7 percent stake and sell the remaining shares to two buyers instead of selling the entire block to one suitor. Such a move would ensure that no open offer for an additional 26 percent of the company gets triggered following the share sale.
In December last year, the bank revived its plans to cash out of the venture after the stock hit a 52-week low of Rs 850 on the BSE last October. Its initial plan was to sell 66 percent along with private equity investor Carlyle. However, the plan was dropped in the wake of liquidity pressure following a default by Infrastructure Leasing & Financial Services (IL&FS) in September-October 2018.
According to the report, GA may pick up another 12 percent in the mortgage firm, taking its stake to around 22 percent. Varde is expected to acquire a 10 percent stake.
The companies are said to have submitted binding bids on February 8 and a formal announcement is expected later this week, sources told the paper.
PNB Housing Finance, founded in 1988, has emerged as one of the leading housing finance firms in the country with assets worth Rs 62,252 crore under management as on March 31, 2018.
Net non-performing loans of the company, which has 84 branches, stands at 0.25 percent of the total. Mortgages account for 70 percent of the business.The move comes after an over Rs 14,000 crore fraud hit PNB last year. After the alleged fraud by Nirav Modi and Mehul Choksi, the management assured investors it will liquidate its non-core investments to unlock capital and strengthen its balance sheet besides resolving bad loans.