Market volatility challenge to PNB HFC's equity plans, says ICRA

Further delay in fundraising will postpone the expected improvement in the leverage profile and limit the cushion available for absorbing contingencies.

The capital market bloodbath due to the Covid-19 outbreak poses a challenge to PNB Housing Finance’s plan to raise Rs 1,700 crore in equity capital in the near term.
Also, further delay in fundraising will postpone the expected improvement in the leverage profile and limit the cushion available for absorbing contingencies, according to rating agency ICRA.

The agency has downgraded rating for HFC’s non-convertible debentures and tier II bonds from “AA+” to “AA” due to weakening of its asset quality, especially in the wholesale loan portfolio”. The rating revision factors in delays in its fundraising plan along with the lower-than-expected planned equity infusion.

PNB HFC recently took the board'’s approval to raise up to Rs 1,700 crore of equity, which is lower than the previously envisaged amount, ICRA said. Further, considering the concentrated risk in this profile and the challenging operating environment, the company’s economic capital requirements have increased.

Its stock closed 4.97 per cent down at Rs 161.6 per share on Friday (April 3) on the BSE.

The company’s assets under management (AUM) stood at Rs 86,297 crore at the end of December 2019. Punjab National Bank (PNB) and The Carlyle Group had a stake of 32.65 per cent and 32.22 per cent, respectively, as of December 31, 2019.

The firm has witnessed moderation in growth in portfolio given the market conditions and the same is expected to remain so in the near term.

The risks are mitigated by the good collateral cover maintained for exposures, its risk management systems and processes, which support ability to proactively manage the portfolio as demonstrated in the past.

PNB Housing Finance raises $100 mn from IFC for affordable housing projects

PNB Housing Finance Managing Director Sanjaya Gupta said this is the first ECB disbursement during the current financial year under the RBI automatic route.

PNB Housing Finance Ltd on Monday said it has raised $100 million (around Rs 690 crore) from International Finance Corporation (IFC), a member of the World Bank Group, to finance the purchase of affordable housing projects.

"The investment was made under the central bank's automatic route in the revamped external commercial borrowings (ECB) framework," PNB Housing Finance Ltd said in a regulatory filing.

PNB Housing Finance Managing Director Sanjaya Gupta said this is the first ECB disbursement during the current financial year under the RBI automatic route.

Several other ECB proposals are in the pipeline.

"The RBI has allowed us to borrow ECB up to $750 million annually under the automatic route and considering the strong fundamentals and inherent growth of the company, we are hopeful that in the coming months our company will further utilise the facility," he said.

IFC South Asia Manager Financial Institutions Group Hemalata Mahalingam said: "To support the Indian government's vision of Housing for All by 2022, our country strategy places a strong emphasis on the affordable housing sector...

Our partnership with PNB Housing Finance will help them further expand to smaller towns and cities and reach low-income customers with loans to buy homes and help raise their living standards".

Business Standard