Carlyle picks up Destimoney's 49% stake in PNB Housing Finance

US-based private equity firm Carlyle group beat off stiff competition to acquire a 49% stake in PNB Housing Finance from Destimoney Enterprise Pvt Ltd.

PNB Housing Finance is the mortgage finance arm of one of India’s largest public sector lenders, Punjab National Bank, which owns 51%, and is the fourth largest housing finance company in the country.

DEPL – which is involved in the financial sector in India and Asia – is a subsidiary of New Silk Route (NSR)-controlled Destimoney Enterprises Ltd. New Silk Route was earlier promoted by former McKinsey & Co head Rajat Gupta and hedge fund manager Raj Rajarathinam, both of which were later charged and convicted on insider trading charges.

The non-banking finance company (NBFC) was valued around $ 500 million, sources said; HDFC Bank advised Carlyle for the deal, while Morgan Stanley was the advisor to NSR. The transaction was concluded last week.

Several private equity firms, including GIC-Chrys Capital combine, Actis and General Atlantic, were reportedly in talks with NSR to pick up a stake in what turned out to be the largest transaction in the housing finance space.

Carlyle will enjoy the same rights in terms of representation in the board that Destimoney had.

The deal comes as a positive development for public sector banks which are looking to sell a part of their non-core assets to strengthen their capital position at a time when the government is infusing capital only in PSBs that have shown better efficiency.

PNBHF profits grew 54% to Rs 87 crore in the six months ended September 2014 compared to Rs 57 crore during April-September 2013. It provides loans to purchase and construct residential premises and had a debt portfolio of Rs 13,733 crore as of September 30, 2014, against Rs 8,502 crore a year earlier, a jump of 62%.

Its individual loan portfolio grew 51% at Rs 8,696 crore in the 12 months ended September 2014 from Rs 5,747 crore at the end of September 2013. Deposits grew 97% to Rs 2,958 crore from Rs 1,505 crore a year earlier.

Punjab National Bank