PNB Housing Finance plans to raise Rs 2,500 cr through rights issues

Punjab National Bank Housing Finance (PNB HFC) has planned to raise Rs 2,500 crore in equity by allocating shares via rights issues to meet capital adequacy norms and support business growth.

The board of the company approved the request to raise cash at a meeting.

The company told the media that it would announce the issue price, entitlement ratio, and timing in due course.

In December 2021, the capital adequacy ratio (CAR) of the firm was 21.59%, with tier I of 18.9%.

PNB HFC cancelled plans for a preferential issue of equity share issuance to earn Rs 4,000 crore from a group of investors led by private equity firm Carlyle in October 2021. The acquisition was called off due to lengthy litigation and uncertainties about approvals.

At the end of December 2021, public sector lender PNB held a 32.57% ownership in the HFC as a promoter.

According to the media, PNB HFC's position in mobilising cost-effective liabilities would be strengthened by raising equity capital, allowing for more competitive loan pricing. Although deleveraging has decreased financial risks, the asset-side risk remains high.

Due to the company's purposeful choice to reduce its wholesale portfolio, Covid-led operational interruptions, and tough competition from banks, PNB HFC's loan portfolio has dropped since FY19.

From Rs 74,469 crore in March 2021 and Rs 83,346 crore in March 2020, its assets under management (AUM) fell to Rs 66,539 crore in December 2021.

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