Financial services firm Dawnay Day has picked up a 26% stake in housing finance subsidiary of Punjab National Bank (PNB), the bank has informed BSE. Dawnay Day, which is controlled by private equity firm New Silk Route, also has the option to up its stake to 49% through fresh issue of shares in the firm. Others like GE Capital, Carlyle, and Tata Capital were also reportedly looking to pick up the stake.
PNB expects to get Rs 70-80 crore from the stake sale and deal will be closed by June, reports Hindu Business Line quoting Dr K.C. Chakrabarty, Chairman and Managing Director of PNB. PNB Housing Finance reported a total income of Rs 277.21 crore for FY09, with an increase of 32% in net profit for the fiscal year at Rs 53.41 crore. Its is a wholly owned subsidiary of PNB and Dawnay Day will now become its strategic partner.
This is the second deal by New Silk Route (NSR) this week, which has over $1.4 billion under management with a focus on the Indian subcontinent and the Middle East. Earlier this week NSR invested Rs 135 crore in KS Oils, a listed edible oil manufacturing company.
Home loans are a fast growing segment in the Indian economy with several global financial services firms showing interests in the space. BNP Paribas, AIG Capital, Barclays and Societe Generale are some of the firms who have bough substantial stakes in local housing finance firms. Private equity major Carlyle has also picked up a stake in Chennai-based Repco Home Finance, a subsidiary of Repatriates Co-operative Finance and Development Bank
Besides PNB, another Indian public sector bank, IDBI, has also put its housing finance unit on the block. Dewan Housing Finance Corporation is reported to be the frontrunner to acquire IDBI Home Finance. LIC Housing Finance is also looking to raise capital through a qualified institutional placement (QIP), diluting upto a 10% stake.
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