PNB Housing Approves Rs 2,500 Crore Rights Issue

PNB Housing Finance Ltd. will come out with a Rs 2,500 crore rights issue on April 13 after its board approved the final fund-raising plan on Tuesday. The issue will close on April 27.

The company will issue 29 new equity shares for every 54 shares held by its existing shareholders, according to an exchange notification. PNB Housing Finance's board had earlier given its nod for the rights issue in March 2022.

The housing finance company will issue over 9 crore fully paid-up equity shares, each worth Rs 275, for an amount aggregating up to Rs 2,493.76 crore, it said in the notification. On Wednesday, PNB Housing Finance was trading at Rs 482.25 per share, implying that the rights issue is being conducted at a discount of 43% to the current market price.

The rights issue will be a boost for PNB Housing Finance's growth needs as it seeks capital for business expansion. This is the first equity raising announcement by PNB Housing Finance since its failed Rs 4,000 crore capital raising plan in 2021. The company had then sought to raise capital from a clutch of investors led by the Carlyle Group; however, the Securities and Exchange Board of India raised a red flag on the pricing of the issue, eventually leading to the plan being scrapped.

In June 2022, the Punjab National Bank's board approved Rs 500 crore worth of capital infusion into PNB Housing Finance's rights issue. The bank had previously been stopped from injecting further capital into the housing finance company by the regulator. For the current rights issue as well, the bank will have to go back to the Reserve Bank of India for a final nod.

PNB Housing Finance reported a consolidated net profit of Rs 269 crore in the quarter ended Dec. 31, compared with Rs 188.45 crore reported a year ago. Total income for the company rose 20% year-on-year to Rs 1,796.52 crore. At the end of the third quarter, the company's loan book stood at Rs 58,034 crore, marginally up from Rs 57,845 crore a year before that.

The capital risk adequacy ratio stood at 24.6% as of Dec. 31, with Tier I capital at 22.4%.