PNB Housing Finance board to consider fund-raising on May 31

The existing brand arrangement dated December 7, 2009, will continue to govern use of the PNB trademark until PNB’s shareholding in the housing finance company is 30% or more.

The board of PNB Housing Finance will meet on May 31 to consider fund-raising. The fund-raising by the non-bank lender was long pending after it had announced to raise Rs 1,800 crore through a preferential or rights issue in November 2020. However, the plan was derailed as parent Punjab National Bank (PNB) did not get the approval from the Reserve Bank of India to infuse capital into PNB Housing.

During an analyst call in April 2021, Hardayal Prasad, MD and CEO of PNB Housing Finance, said: “As you are aware that we were waiting for the capital raise with participation of PNB and Rs 600 crore was earmarked since then. But after, the permission was not given. So, we have initiated the process of evaluating all options and modes for the funds raise.”

Interestingly, the non-bank lender has also disclosed separately on Tuesday that it has entered into a fresh trademark agreement with PNB, which gives the parent right to withdraw its brand name from the mortgage lender. The new trademark agreement will be applicable if the shareholding of PNB in PNB Housing Finance falls below 30%. Currently, PNB holds 33% stake in the housing finance company. FE learned that the new trademark agreement has been signed as any equity raising by PNB Housing Finance would dilute PNB’s shareholding in it.

The existing brand arrangement dated December 7, 2009, will continue to govern use of the PNB trademark until PNB’s shareholding in the housing finance company is 30% or more. Upon PNB’s shareholding falling below 30%, the new agreement dated May 24 will replace the existing agreement, the housing finance company said.

The fresh agreement includes a royalty clause as well. In the event of PNB’s shareholding falling below 30%, PNB housing will pay a royalty between Rs 15 crore and Rs 30 crore. The royalty would be 0.2% of its revenue or 2% of the net profit, whichever is higher.

PNB Housing Finance had earlier registered a net profit of Rs 127 crore during the March quarter (Q4FY21), against a net loss of Rs 242 crore a year ago same period. The lender was able to curtail expenses by 28% year-on-year (y-o-y) to Rs 1,646 crore during the March quarter. However, the NBFC’s total revenue declined 6% y-o-y to Rs 1,834 crore in Q3FY21. The lender’s capital to risk weighted assets ratio (CRAR) was at 18.73% at the end of March 2021, falling from 20.06% a quarter ago.