Mumbai: Race for acquiring the stake in PNB Housing Finance Limited gets intense as Bandhan Bank also joins the foray. As per the information given by the people aware of the development, Kolkata based private sector lender will be submitting the expression of interest (EoI) for PNB Housing Finance soon.
It is been said that Bandhan Bank is looking forward to form a consortium with a few sovereign wealth funds (SWFs) and global financial institutions like GIC of Singapore. GIC is also looking for a similar private equity-led consortium backed by Blackstone. After this only it will decide to choose between going with a strategic group or a fund lend alliance.
As per the information provided by the sources, probably Kolkata-based private lender will make a stock offer or a combination of cash and stock as against a pure cash bid.
As the development took place, the first round of management meetings have already been completed between Bandhan Bank and top officials of PNB Housing which were led by Sanjay Gupta, MD. It is also been said that Goldman Sachs is the advisor for the deal.
If the PNB Housing buyout becomes a reality for Bandhan Bank it might prove to be quite beneficial for the lender as the newly listed bank would get a good mortgage portfolio without having to spend time building it.
But more importantly, it could help Bandhan Financial Holdings reduce its stake in the bank closer to RBI norms, said one of the officials mentioned above on condition of anonymity as the talks are still in private domain.
The bank has to reduce its promoter stake to 40per cent within three years of starting its business according to RBI’s licensing norms. Though Bandhan will complete three years at the end of this month, it is far away from the RBI target. Bandhan Financial Holdings currently owns 82.8per cent shares in the bank.
When contacted, Bandhan Bank founder and CEO Chandra Shekhar Ghosh said he has no comments to offer at this stage.
The current market capitalisation of Bandhan Bank, is Rupee 81,772 crore, making it the eighth largest bank in India in terms of market capitalisation after HDFC, SBI, Kotak Mahindra, ICICI Bank, Axis, IndusInd and Yes Bank.
The bank’s loan book has grown from Rupee15,578.4 crore as of FY16 to Rupee32,340 crore as of FY18 while customer base has increased to 1.3 crore in 33 states. Microcredit forms 86 per cent of loan book while retail, SME together are still small. Currently, the lender has 936 branches and 430 ATMs which serves over 25 lakh general banking customers.
PNB Housing’s key shareholders Punjab National Bank (PNB) along with US private equity firm Carlyle corners 66per cent of the company. The public sector lender has been under stress due to high nonperforming assets (NPAs), aggravated further after the Nirav Modi fraud in which Rupee14,500 crore guarantees issued by the bank were used to borrow from banks abroad.
PNB Housing is the non-core business for the bank and it has hired Credit Suisse to find a buyer for its stake sale. Morgan Stanley is advising US PE firm, Carlyle.
The plan is to sell a majority stake which is 51 per cent ultimately leading to an open offer which means both promoters will cede control of PNB Housing. Almost all big names in Indian financial services are interested because it is a well-running portfolio that has become the second largest deposit-taking NBFC in the country.
Besides Bandhan, other strategic buyers who are interested in PNB Housing Finance are Kotak Mahindra Bank, Fullerton, Aditya Birla Capital, Indiabulls Housing Finance and Hero FinCorp while private equity investors which have evinced interest are Blackstone, KKR, Bain Capital, Apax Partners, Temasek and Canadian pension fund CPPIB among others. All EoIs have to be submitted by this week and players will be shortlisted in a month’s time for non-binding bids.
The market capitalisation of PNB Housing comes at Rupee23,394 crore, a sharp rise since its Rupee3,000 crore IPO in November 2016. Its disbursements have grown at a 52 per cent compound annual growth rate over the last four years. Its net non-performing loans were at 0.25per cent. Carlyle sold a 4.8 stake for around Rupee1,040 crore on May 8, through block deals, valuing the housing finance company at Rupee21,667 crore.