In a setback to PNB Housing Finance, the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (Sebi) are reportedly looking into ‘regulatory issues’ related to the proposed Rs 4,000 crore-investment by US-based private equity firm Carlyle and others in the housing finance firm.

A PTI report quoting sources said that the concerns of minority shareholders, corporate governance and other regulatory aspects would be looked into by the two regulators. The news led to shares of PNB Housing Finance slumping 5 per cent to close at Rs 776.85 on the BSE on Monday.

Late last month, PNB Housing Finance had announced that the Carlyle group will lead a Rs 4,000-crore capital infusion in the firm with other investors that include Aditya Puri, the former MD and CEO of HDFC Bank. Pluto Investments, an affiliated entity of Carlyle Asia Partners IV, LP and Carlyle Asia Partners V, LP, will invest up to Rs 3,185 crore through a preferential allotment of equity shares and warrants, at a price of Rs 390 apiece.

However, a proxy advisory firm, Stakeholders Empowerment Services (SES), expressed concerns about the deal. It wondered if Punjab National Bank (PNB) had willingly surrendered control without taking a fair compensation. The firm asked whether PNB had sacrificed over Rs 2,000 crore in a deal that was an “unfair transaction, against public shareholders and PNB”.

The deal is “ultra vires” to the Articles of Association, it added. SES said the proposed deal will change the control of PNB Housing Finance — from PNB being the sole promoter to a joint control holder with Carlyle Group. PNB’s stake will come down to 20.28 per cent from the existing 32.64 per cent, while that of Carlyle will rise to 50.16 per cent from 32.21 per cent. Carlyle will become the major shareholder and promoter along with its persons acting in concert (PACs), including Puri.

Earlier this year, the RBI had shot down a proposal of PNB to infuse capital into the subsidiary through a rights issue. Recently, PNB managing director and CEO S.S. Mallikarjuna Rao said the bank will neither be investing nor divesting its stake but because of investment from other sources, its shareholding could come down to 21 per cent.