PNB Housing Fin - Fast Growing HFC


(Susindar) #337

Management control by the highest shareholder is not always the case. For example, Berkshire prefers to only buy controlling stake and at the same time mostly only buys when the existing management keeps running the company. It is not the domain expertise of a holding company or a PE in this case to run every business including housing finance.

I did not say PNB manages this company. I said PNB will have an influence on the management which is obvious being the second larger shareholder.

The reason that I find this to be an exciting pick is due to the growth it is showing and reasonable control on NPA, although it’s loanbook is not seasoned yet. Looks in many ways like PTC financial services, although I hope it is not.


(Furkan Alam) #338

Just to add, after Carlyle bought the stake, there was a management rejig.

Sanjay Gupta who is the current Managing Director, has 16 years of experience in HDFC, where he held the position “Head of Business Development and Distribution”.

Jayesh Jain , who is the CFO currently was the CFO in Gruh Finance earlier…

In addition they appointed many others.
This rejig resulted in the tremendous growth they are showing over last few years.
So in no way their management should be considered as PSU types…It’s a professionally managed company…

Disc: - Invested and views may be biased


(Nityanand) #339

Fyi…Jayesh Jain is not there with PNB Housing. He left the same in the month of Dec 2017.


(Furkan Alam) #340

Thanks for correcting…I just checked their website.

The current CFO is Kapish jain who has previous experience in Xander, Au Small Finance Bank, ICICI Prudential and Deutche Bank…


(Julian) #341

As far as I understand, Carlyle (37% voting share) is having 2 representatives on the board while Punjab National Bank (30% voting share) is having 2 representatives. The rest are independent. The company is professionally managed with Sanjaya Gupta being given a free hand. However he goes as per the business plan of private equity, which no doubt can be seen in the superb performance. Officially the promoter is PNB while practically Carlyle is running the show. Promoters have been advised by the regulator to keep themselves at arm’s length from PNB housing. Perhaps Carlyle can give an open offer and take over the company officially. But they don’t want to lose the tag “PNB” and hence the show goes on like this. The tag “PNB” obviously means more business for the company as customers prefer to deal with PSUs rather than a private company.


(Raj A A) #344

Carlyle to Sell 10% Stake in PNB Housing Finance

EXITING WITH BIG PROFIT The PE firm, which had invested ₹1,600 cr in 2015 for a 49% stake, will make more three times its initial investment
[email protected]

Mumbai: Global private-equity major Carlyle is seeking to sell a 10% stake in PNB Housing Finance, making more than three times the money it had initially put in and likely boosting the performance of the Asia buyout fund through which it holds the investment in the Indian mortgage lender.

PNB Housing Finance, which listed in Mumbai in November 2016 after a ₹3,000-crore initial public offer, has seen its market value almost double since the public debut. The share price has risen from ₹775 apiece to ₹1,335 apiece. Carlyle had invested ₹1,600 crore in February 2015 for a 49% stake in the unlisted company.

“Private-equity fund Carlyle has put a 10% stake on the block in PNB Housing Finance and is looking to sell it in the next 12-18 months,” said a source close to the development.

The listed mortgage lender has a market capitalisation of ₹22,242 crore. Carlyle’s 37.55% stake is worth ₹8,351 crore in the listed subsidiary. A 10% stake sale would fetch Carlyle ₹2,224 crore at current market prices.

Carlyle did not comment on the proposed stake dilution. Sanjaya Gupta, managing director of PNB Housing Finance, also said that he would not like to comment as it is a subject involving shareholders.

PNB Housing Finance is the second largest deposit taking housing finance company and Carlyle is its largest shareholder, followed by Punjab National Bank (PNB) that owns 33%. In November 2017, PNB had sold 6% to a clutch of investors, including the General Atlantic Singapore Fund.

In February 2015, Destimoney Enterprises Limited’s 49% stake was sold to Quality Investments Holding, a company of the Carlyle Group, L.P, and incorporated in Mauritius.

Other investors include Birla Sunlife MF, Motilal Oswal MF, Wasatch, T.Rowe Price, Government of Singapore, Fidelity, Invesco, Reliance MF and Nomura Asset Management.

During the initial share sale, PNB had reduced its stake in PNB Housing Finance to 39% from 51%.

The company has assets under management of ₹57,668 crore at the end of December 2017. Its gross nonperforming loan was at 0.42%. The government has given a boost to affordable housing by creating a dedicated fund in collaboration with the National Housing Bank as it looks to fulfil its target of building such homes for all by 2022.

Also, to boost the inventory of affordable homes in the coming fiscal year, New Delhi has decided to build 5.1 million homes in rural areas. Assistance has been provided to construct 3.7 million homes under the Pradhan Mantri Awas Yojana.

Shares of the company declined 1.22% to ₹1,335.20 on the Bombay Stock Exchange Wednesday.


(Susindar) #345

I think this is one of the downsides of having a management not being run by owner operators. No long term plans for the shareholders and no skin in the game for management.


(Julian) #346

I don’t believe there is anything to be worried. The Promoter PNB housing has reduced stake to 30% and Carlyle does not want to be caught napping with 37%. With 37% you could end up as the promoter. Hence Carlyle would naturally want to sell their holdings to bring it below that of the promoter. Carlyle would make more by holding. But they are compelled to sell for strategic reasons.


(Rushil) #347

Could you elaborate further on this ? Why don’t they want to be classified as promoter.
Thanks in advance.

Dis-Invested


#348

@baba You were spot on in guessing that Carlyle would want to exit.


(thecroc) #349

Carlyle is not exiting. After selling 10% it will hold 27.55% still. (and history is made by earnings yoy/qoq, and not by who held the shares)


(Julian) #350

You need to ask the questions to Carlyle. Intentions are deduced from actions.


(arun10dec) #351

I think this statement was made before Canfin share split…Canfin was trading near 2800 or so…he expected it to be in 4 digits before 2020


(sta) #352

LOOK at the annual report of Carlyle. They sell something each year. Why would pnbhf be any different. I don’t think they are here for long haul. Was very much interested in this company. But now need to wait for next con call.


(Rushil) #353

They won’t be making any statements on shareholders in the concall.


(sta) #354

If anybody here is attending the con call could you ask about the promoter. Carlyle group is one of the reason for this company’s attractiveness. IF I get a chance to attend the con call I will also try asking. Thanks


#355

PNBHousingPressReleaseMarch18.pdf (473.4 KB)
PNBHousingInvestorPresentationMay18.pdf (1.6 MB)

Results are out!

NII growth 36% Q4 FY17-18 vs Q4 FY16-17 and 54% YoY
PAT growth 44% Q4 FY17-18 vs Q4 FY16-17 and 58% YoY

Disbursements increased 61% YoY
AUM growth 50% YoY

Request to experts on forum to please shed more light on the results and what to look forward to going ahead.


#356

PAT growth QoQ is just 0.8% (1.7 Crores)


(sumitg04) #357

#358

Sorry for the mistake. I have corrected it now in the original post.