Credit Bulletin
April 05, 2019 | Mumbai
Update on PNB's partial stake sale in PNB Housing
 
On March 29, 2019, Punjab National Bank (PNB, rated: 'CRISIL AA+/CRISIL AA-/Stable') entered into an agreement to sell 13.01% stake in PNB Housing Finance Limited (PNB Housing) to General Atlantic Group (global private equity firm) and Varde Partners (alternative investment firm) for Rs 1,851.6 crore. The transaction is subject to satisfaction of customary conditions, including applicable regulatory approvals. Post these transactions, PNB's stake in PNB Housing would reduce to19.78% from 32.79% currently.

CRISIL's ratings on PNB Housing remain unaffected by this announcement. The ratings on the debt instruments of PNB Housing factor in the brand-sharing benefits that PNB Housing derives from PNB. CRISIL understands that PNB would remain a promoter and strategic shareholder in PNB Housing. CRISIL will continue to closely monitor the developments on this front. PNB Housing is managed by an independent and stable management team and therefore CRISIL expects no impact on the operations of the company post the stake sale by PNB.

The rating also continue to reflect the company's healthy market position, accompanied by comfortable asset quality metrics. Capitalisation remains adequate, providing a healthy cover for any asset-side risks. These strengths are partially offset by the average, albeit improving, earnings profile. CRISIL will continue to monitor the asset quality of the company as the portfolio seasons. Liquidity profile of PNB Housing is adequate; since October 2018, the entity has also been able to raise funds via the ECB route and has consistently managed to access the capital markets as well as incremental bank funding.
 
For accessing the previous rating rationale, please use the following link:
Company name Link to rating rationale
PNB Housing Finance Limited Click here
Note on complexity levels of the rated instrument:
CRISIL complexity levels are assigned to various types of financial instruments. The CRISIL complexity levels are available on www.crisil.com/complexity-levels. Users are advised to refer to the CRISIL complexity levels for instruments that they consider for investment. Users may also call the Customer Service Helpdesk with queries on specific instruments.
Links to related criteria
CRISILs Bank Loan Ratings - process, scale and default recognition
Rating Criteria for Finance Companies
CRISILs Criteria for Consolidation
CRISILs Criteria for rating short term debt
Criteria for Notching up Stand Alone Ratings of Companies based on Parent Support

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