PNB will invest ₹500 crore in PNB Housing Finance Rights Issue | Popgen Tech
Punjab National Bank (PNB) will invest ₹ 500 crore in the proposed ₹ 2,500 crore rights issue of PNB Housing Finance Ltd (PNBHFL), a senior bank official said.
The second largest public sector bank, which holds a 32 per cent stake in PNBHFL, has secured Reserve Bank of India (RBI) approval to infuse up to ₹ 500 crore in the Issue, Atul Kumar Goel, Managing Director and CEO, said PNB. on Friday.
“There is no plan to sell our existing shares in PNBHFL. The moment we invest ₹ 500 crore, the bank’s stake in PNBHFL will fall below 30 percent. This is the regulatory requirement. But our shares will remain above 26 percent, so that we continue to be categorized as a promoter,” said Goel.
He was hoping that the Rights Issue process would be completed by the end of December.” If not, it should be completed by the next quarter (January-March 2023), he said.
The PNBHFL board had approved capital raising of up to ₹ 2,500 crore through a rights issue in March this year. The detailed terms of the rights issue, including the issue price, rights entitlement ratio, registration date and timing, are yet to be finalised.
PNBHFL was forced to scrap its ₹4,000 crore capital raising plan involving Carlyle Group and other marquee investors in October last year. The preferential issue to private equity giant Carlyle and other investors had hit a regulatory hurdle over pricing.
Goel said PNB raised ₹2,000 crore through AT-1 bonds at 8.75 percent in the first week of July 2022. The proceeds were used to repay capital of ₹1,500 crore raised earlier.
“We are waiting and seeing. If the rates are conducive and we are in a position to raise less than 8.75 percent, we will not mind hitting the market. As of today there is no immediate need. The aim is to reduce the cost of capital,” said Goel.
The PNB board has already approved a capital raising of ₹ 12,000 crore. Of this, ₹ 5,500 crore is for AT1 and the remaining ₹ 6,500 crore for Tier-2 capital.
Goel said the bank had a comfortable capital adequacy of 14.80 percent, against a regulatory requirement of 11.5 percent.
Meanwhile, regarding the digital banking units announced in this year’s budget, Goel said that the bank had been allocated eight of the planned 75 branches, and all eight will become operational from July 31.