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General Atlantic, Värde Partners to buy $268-mn stake in PNB Housing
Photo Credit: VCCircle

Alternative investment firms General Atlantic and Värde Partners have agreed to buy a 13.1% stake in PNB Housing Finance Ltd for Rs 1,851.6 crore ($268 million).

PNB Housing's parent, state-run Punjab National Bank, said in a stock-exchange filing on Friday that the two US-based firms will invest Rs 925.80 crore each.

General Atlantic is an existing investor in the housing finance firm with a 9.91% stake as on December-end. PNB Housing also counts Carlyle as a major shareholder with a 32.36% stake.

The bank's stake in the mortgage lender will fall to 19.78% after the transaction from 32.79% at the end of December.

The transactions are subject to conditions, including receipt of applicable regulatory approvals.

General Atlantic and Värde are buying PNB Housing shares at Rs 850 apiece. Shares of PNB Housing opened at Rs 834.4 apiece on Friday and touched a high of Rs 849.5 on the BSE.

Punjab National Bank also intimated that it had sold on Thursday its entire stake of 4.2 million unlisted equity shares in Experian Credit Information Company of India Pvt. Ltd. According to a September 2018 request for proposal, Punjab National Bank owned about three per cent stake in Experian and the state-run lender identified Indian Bank, which has 2.14% stake in Experian, as another seller. 

The twin developments come even as Punjab National Bank recovers from a $2 billion fraud last year allegedly orchestrated by a few employees for several years. The widespread risk-control and monitoring lapses in many areas largely helped two jewellery groups -- controlled by Indian diamond magnate Nirav Modi and his uncle Mehul Choksi -- to raise billions of dollars in foreign credit and commit India’s biggest-ever bank fraud

The massive fraud led the bank to post a third straight quarterly loss of Rs 4,532 crore ($622.7 million) for the three-month period ended September 2018. By the quarter ended December 2018, the bank booked Rs 247 crore in net profit for the first time since the fraud. 

In order to prop up financials, managing director Sunil Mehta announced last October that the bank has identified non-core assets worth Rs 8,600 crore to be sold in the current financial year. 

In July last year, the bank and Carlyle had initiated a joint process to sell a minimum 51% stake in PNB Housing. In November, Carlyle withdrew from the sale process. But the bank decided to independently pursue with the sale of its stake in part or full.

PNB Housing’s assets under management stood at Rs 79,737 crore at the end of December. The entity has loan assets of around Rs 70,717 crore.

General Atlantic acquired some stake when existing private equity investor Carlyle Group made a partial exit in May last year just over three years after betting on the mortgage finance company, generating stellar returns in the process.

Carlyle had indirectly picked up 49% stake in PNB Housing when it bought out Destimoney Enterprises Pvt. Ltd from New Silk Route in February 2015. 

When PNB Housing went public in late 2016, Carlyle’s stake dropped to around 37%.

Some of the other finance deals closed by General Atlantic include Karvy Fintech, IIFL Wealth Management, BillDesk, IndusInd Bank and NSE. Värde's known bets in India include its stressed asset joint venture with Aditya Birla ARC and an investment in Altico Capital India. 

The housing finance segment has seen a lot of investor activity. 

Recently, SEWA Grih Rin Ltd, an affordable housing finance company of the Self-Employed Women's Association (SEWA) Group, raised Series B funding from Oikocredit, Omidyar Network India, HDFC Life Insurance, HDFC Holdings Ltd and Women’s World Banking.

Blackstone Group, the world's largest private equity firm, inked a pact to acquire Aadhar Housing Finance Ltd in January.

Last October, IIFL Asset Management Ltd,  a unit of financial services firm IIFL Holdings, invested Rs 100 crore ($13.6 million) in Tamil Nadu-based Kadaieshwar Homefin Pvt. Ltd, also known as KE Housing Finance.

International Finance Corporation (IFC), the private-sector investment arm of the World Bank, had in February last year invested around $75 million (around Rs 485 crore) in L&T Housing Finance Ltd.

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