Breaking his silence on the fund-raising plans for PNB Housing Finance, S.S. Mallikarjuna Rao, managing director, Punjab National Bank, the parent firm, said there was no error of judgement and the subsequent rise in the share prices of the mortgage lender after the announcement could not have been anticipated.

He, however, said the future course of action would depend on the Securities Appellate Tribunal (SAT) order and on the basis of that order the housing finance lender as well as PNB will look at various options.

Under the deal announced on May 31, the US-based Carlyle, alongside other investors, is slated to infuse Rs 4,000 crore capital into PNB Housing Finance through the issuance of preference shares and warrants. However, the deal has come under the scanner of capital markets regulator Sebi.

The company was directed to carry out the valuation process of shares under the relevant legal provisions. PNB Housing contended that it has followed Sebi norms in deciding the issue price at Rs 390 apiece.

Defending the stance taken at the PNB Housing Finance Board meeting on May 31, Rao told reporters that “there was no error of judgement. If you have seen the share price of PNB Housing Finance in the last 2-2.5 years, it was hovering at below rate. ICDR guidelines clearly indicate the kind of formula to be used for pricing for listed entities”.

His remarks are seen as a cautious support of the PNB subsidiary’s plan to sell a stake to a clutch of foreign investors led by Carlyle.