Market regulator Securities and Exchange Board of India (Sebi) has asked PNB Housing Finance to put on hold its proposed Rs 4,000-crore deal with Carlyle group.

The market regulator feels the transaction is “ultra-vires” of the company’s Articles of Association (AoA). It has now directed PNB Housing Finance to carry out a valuation process by an independent registered valuer and then proceed with the allotment of preferential shares.

Late last month, PNB Housing Finance had said that Carlyle group will lead a Rs 4,000-crore capital infusion in the company with other investors that include Aditya Puri, the former MD & CEO of HDFC Bank.

The transaction would have seen Pluto Investments S.a.r.l. (Pluto Investments), an affiliated entity of Carlyle Asia Partners IV, and Carlyle Asia Partners V investing up to Rs 3,185 crore through a preferential allotment of equity shares and warrants at a price of Rs 390 per share.

It would have also eventually resulted in the Carlyle group holding more than 50 per cent in the housing finance company, thus becoming the major promoter and shareholder along with Puri, while Punjab National Bank’s stake would have come down to a little over 20 per cent from 33 per cent at present.

However, after the announcement, proxy advisory firm Stakeholders Empowerment Services (SES) had raised a number of questions on the proposed deal. It had said that the preferential issue proposed is against the interest of public shareholders and also the shareholders of PNB and the exchequer. SES had also asked if PNB had willingly surrendered control without extracting a fair compensation while pointing out that the deal is “ultra vires” to the AoA of the housing finance company.

According to SES, the company’s AoA clearly provide that either it must make a rights issue, or if a rights issue is not being made, it must issue shares at a price which has been determined by a registered valuer. The proxy advisory firm also added that PNB Housing Finance had not determined the price by valuation by a registered valuer.

Following these concerns, the market regulator had begun to look into the “regulatory issues” related to the preferential allotment.