PNB Housing Finance will get fresh capital from private equity giant The Carlyle Group and Aditya Puri’s Salisbury Investments, allowing promoter Punjab National Bank to dilute its majority stake in the company.

PNB Housing Finance will raise up to Rs 4,000 crore, the key objectives being to reduce the promoter’s stake in the business and augmenting capital adequacy.

Punjab National Bank will no longer be the majority shareholder of the housing finance company. But it will continue to function in the capacity of promoter and will remain a key shareholder, PNB Housing Finance said in an exchange filing.

The stock hit upper circuit on the BSE today with the prospect of former HDFC Bank chief executive Puri participating in the new capital-raising drive along with existing private equity investors Ares SSG and General Atlantic.

Carlyle and its affiliated funds will invest up to Rs 3,185 crore in the housing finance company through a preferential allotment of equity shares and warrants at Rs 390 per share.

PNB Housing Finance has entered into a share subscription agreement with each of the proposed allottees -- Pluto (Pluto SSA), General Atlantic Singapore Fund FII Pte Ltd, Alpha Investments V Pte. Ltd and Salisbury Investments.

Salisbury Investments is the family investment vehicle of Puri, senior advisor for Carlyle in Asia and the former head of HDFC Bank.

Punjab National Bank, which owns a little over 32% stake, will continue to be classified as part of the “promoter group” following the completion of this transaction.

“This has also triggered an obligation on Pluto and Salisbury Investments to make an open offer to the shareholders of the company following the provisions of the Securities and Exchange Board of India (Sebi),” said PNB Housing Finance.

The open offer for further 26% stake in the housing finance company will be at a floor price of Rs 403 per share.

“I believe PNB Housing Finance with its enhanced capital base is very well positioned to meet the growing demand in its areas of operation. I look forward to helping the company in this exciting journey,” Puri said in a statement. He will be appointed to the company’s board as nominee of Carlyle Group.

The key objective of raising capital is to augment capital adequacy, reduce gearing and accelerate growth with a focus on retail housing, including self-employed and affordable housing loans such as the Unnati segment, the company said.

Assuming full capital infusion (including warrants) and no other change to the 31 March 2021 financials, the capital adequacy ratio of the company would increase from 18.7% to over 28% and gearing will decline from 6.7 times to less than 5 times.

“This fund raise, and Carlyle’s continued support, puts us in a strong position to benefit from the growing opportunities in the housing finance sector including in the affordable housing loans and self-employed segments,” said PNB Housing Finance managing director and CEO Hardayal Prasad.

Added Punjab National Bank MD and CEO Mallikarjuna Rao, “This capital raise will significantly strengthen PNB Housing Finance’s capital base…We are strongly committed to supporting PNB Housing Finance’s future success, and look forward to continuing our partnership with Carlyle, and PNB Housing Finance.”

Established in 1988, PNB Housing Finance is the fourth-largest housing finance company in India with loan assets of Rs 62,255 crore as of 31 March 2021. It is the second largest in deposits with a size of Rs 17,129 crore.