New Delhi, Jul 19: The housing finance arm of the country’s largest life insurer, LIC Housing Finance, has approached the Securities Appellate Tribunal (SAT) with regard to the company’s proposal of allotting over 4.5 crore preferential shares to the parent company LIC. The company has been asked to explain how it arrived at the decision to fix the issue price for the preference shares at Rs 514.25 apiece for allotting 4,54,00,000 equity shares to LIC.
On Saturday, LIC Housing Finance had informed that stock exchanges — BSE and NSE –were examining the proposed Rs 2,334.70 crore capital infusion into the company by giving additional stake to LIC through issue of preference shares. The stock exchanges have asked the company regarding compliance with the provisions of the Articles of Association (AOA) pertaining to the methodology for computation of price of preferential issue of equity shares to LI, LIC Housing Finance said.
LIC Housing Finance told BSE and NSE that it was in compliance with relevant provisions under AOA for deciding the issue price. The company at its extraordinary general meeting on Monday sought to get shareholders’ approval for issuing preference issue of shares to the promoter.
Chairman M R Kumar, informed at the meeting that “wherever in the notice the issue price per equity share has been mentioned as Rs 514.25, the same shall bread as Rs 514.43 per share and correspondingly the issue size shall be read as Rs 2,335.51 crore (approx) for issue of up to 4,54,00,000 equity shares on preferential basis to the promoter, name LIC of India,” LIC Housing Finance said in a regulatory filing. Even as the stock exchanges had allowed the company to go ahead with its EGM, it restricted the company from declaring the voting results for the preference share issuance.
The results of the e-voting process will not be made public and the same will be kept in a sealed cover and will be disclosed in line with the directions received from the stock exchanges, it said. “It was also informed to the members that a case of preferential allotment is pending before the Securities Appellate Tribunal (SAT) and the verdict of SAT in the matter is expected soon, which may put these issues at rest,” it added.
Chairman Kumar also explained to members the need and rationale for this confidence capital raising and how it is important in this Covid-19 scenario, the company said. LIC Housing Finance stock closed 1.75 per cent down at Rs 460.65 apiece on the BSE on Monday. The LIC Housing Finance case is akin to the PNB Housing Finance, wherein, its proposed Rs 4,000 crore capital infusion deal by allotting preference shares to US-based Carlyle Group and a clutch of other investors, has hit a roadblock, as Sebi has questioned the rationale behind the fixing of the issue price among other.
Following this, the housing finance subsidiary of Punjab National Bank (PNB) reached the SAT against the regulator and is contesting the case before the SAT.
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