After scrapping a Rs 4,000-crore fund-raising deal with US-based Carlyle group, PNB Housing Finance said it has got board approval to raise Rs 2,500 crore through a rights issue.

The price of the issue, rights entitlement ratio, record date, timing and terms of payment would be determined in due course, the company said.

"Inter-alia approved the proposal for raising up to Rs 2,500 crore subject to receipt of regulatory approvals, as may be required by way of issue of equity shares on rights issue basis to the eligible equity shareholders of the company as on the record date", PNB Housing Finance said in a notice to exchanges.

In October 2021, the company’s board had terminated a Rs 4,000-crore deal with a Carlyle-led group of investors, citing fear of prolonged legal hurdles that would have delayed regulatory approvals.

Minority shareholders had red-flagged the deal while questions of conflict of interest were raised with allegations flying that many board members of PNB Housing Finance had links with Carlyle.

Pending legal proceedings, protracted litigation, no clarity on the shareholders’ approval for the preferential issue and the continuing interim order of the Securities Appellate Tribunal (SAT) are among the reasons cited by PNB Housing Finance to terminate the share subscription agreements with Pluto Investments. 

PNB Housing said the company board decided against proceeding with the preferential allotment, following which Carlyle Group affiliate Pluto Investments initiated the process to withdraw the open offer. Pluto was to make the open offer at Rs 403.22 per share.

The deal would have made the US-based private equity giant a majority shareholder while state-run Punjab National Bank’s holding in its housing finance subsidiary would have dropped from 32.6% to 20.3%. Carlyle Group’s stake in PNB Housing Finance, on the other hand, would have climbed to 50.1% from 32%.