The list of bidders, who submitted initial offers on Monday, include Bandhan Bank, Dewan Housing Finance, Godrej, and a group led by Singapore’s GIC and Blackstone.
These bids are said to have come at a premium of 10-12 percent based on PNB Housing Finance’s current share price, which has lost momentum in the recent past due to weak market sentiments. These offers are expected to raise the value of the mortgage lender to about $3.5 billion (about Rs 25,260 crore). The stock closed at Rs 1,285.10 per share, down 1.4 percent, in an otherwise uptrending market.
PNB Housing Finance’s major shareholders include PNB (Punjab National Bank) and private equity major Carlyle Group. Both own about 66 percent in the housing finance company.
This deal is a crucial part of PNB’s turnaround strategy as the bank’s market capitalisation more than halved after being hit by a massive banking fraud allegedly carried out by diamantaire Nirav Modi and his uncle Mehul Choksi. The PNB management expects sale of its shares to fetch around $1.2 billion (over Rs 8,650 crore).
Last month, about 13 entities filed expressions of interest (EoI) but a few dropped out as the price of the deal was high, especially amid an uncertain economic outlook.
Apax Partners, Canada Pension Plan Investment Board and KKR (Kohlberg Kravis Roberts) did not make initial offers. These companies, however, are open to enter into strategic partnerships if Bandhan Bank, Dewan Housing Finance and Godrej lookout for financial sponsors as the deal advances. General Atlantic, which owns 10 percent in PNB Housing Finance, may also team up with the winning bidder.
The deal is expected to close in the next quarter but only after the bank and the government ensure that the valuation is right, otherwise the deal will be called off.