PNB Housing Finance Buyout Becomes Interesting as Seven Bidders are in Race

PNB Housing Finance Buyout Becomes Interesting as Seven Bidders are in Race

New Delhi: Seven bidders have submitted nonbinding offers to acquire PNB Housing Finance in a deal estimated at around $2.3 billion, people directly aware of the matter said. The list of suitors, who submitted initial offers on Monday, included Godrej, Bandhan Bank, Dewan Housing Finance and a consortium led by GIC of Singapore and Blackstone.

The bids, which are likely to be opened later this week, may have come at a 10-12 per cent premium to prevailing share price. PNB Housing Finance shares have lost some momentum in the past week tracking weak market sentiments. The counter closed at Rs 1,301 apiece on Tuesday, giving it a market capitalisation of more than Rs 21,000 crore ($3 billion).

The country’s second-largest state lender PNB and private equity giant Carlyle Group almost equally own 66 per cent in PNB Housing Finance. The offers are expected to value the housing mortgage lender closer to Rs 24,000 crore (or $3.5 billion). The control transaction would also trigger a mandatory open offer to minority shareholders.

The deal is seen to be crucial for PNB Housing Finance’s turnaround strategy as it expects the share sale in the housing finance company to fetch between Rs 7,000-8,000 crore (or $1.2 billion). Sources said some of the bidders have placed all-cash offers.

Last month, 13 suitors had made expression of interests (EoIs) but a few dropped out saying the deal was expensive, especially against the backdrop of an uncertain economic outlook. Canadian Pension Plan Investment Board, Apax Partners and KKR are among those who didn’t make an initial offer. But these global investors are closely watching the progress of the deal-making and are still open to opportunistic partnerships. Some strategic suitors like Godrej, Dewan Housing and Bandhan could ally with financial sponsors if they advance in the race.

Similarly, existing shareholder General Atlantic, which owns a 10 per cent stake, could join forces with the winning bidder. The deal is expected to be closed in the next quarter and the banks as well as the government are keen to ensure that the valuation is “right”, else they will call off the deal.