May 19, 2024

Housing Finance Development

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PNB Housing: Omkara ARC buys Joyous’ Rs 784-crore PNB Housing loan

Mumbai: Omkara ARC has acquired ₹784-crore loan outstanding from PNB Housing Finance of Joyous Housing Limited. The transaction happened at par and helped the mortgage lender in resolving a significant non-performing asset.

Omkara ARC bought the account in an all-cash deal, said two people aware of the development.

PNB Housing Finance had announced the successful resolution of its large corporate non-performing account (NPA) account valued at ₹784 crore, which constituted around 1.3% of the loan asset as of June 30, 2023, according to a stock exchange announcement. The account was resolved on August 19, 2023, following the ARC sale under the ‘Swiss Challenge’ method.

Joyous Housing had failed to repay ₹715.60 crore of the ₹800 crore secured construction finance availed from PNB Housing. Alvarez and Marsal was the advisor to run the process, said one of the persons cited earlier. Spokespersons of PNB Housing and Omkara ARC did not immediately respond to queries on the development, while Alvarez and Marsal could not be reached for comment.

PNB Housing Finance’s gross NPA was reported at ₹2,270 crore or 3.76% of the loans as of June 30. The total loans given by the company amounted to ₹60,395 crore. The company recently raised capital of ₹2,493.7 crore through a rights issue in May. The rights issue was subscribed around 1.21 times where PNB, Carlyle, Ares SSG and General Atlantic participated. Carlyle holds a 32.7% stake, PNB possesses 28.2% and Ares SSG maintains a 9.9% ownership in the company, as of June 30. The mortgage lender’s asset quality had worsened significantly, as its gross NPA ratio increased to 8.1% on March 31, 2022, from 0.5% on March 31, 2019. However, the company decreased its stressed book by making net recoveries through legal processes, one-time settlements and write-offs, where the gross NPA ratio improved to 3.83% by March 31 this year. PNB Housing’s GNPA increased to ₹4,705 crore in 2021-22 from ₹2,997 crore in 2020-21 and ₹2,012 crore in 2019-20, and decreased to ₹2,824 crore as of December 31, 2022. The increase in 2020-21 and 2019-20 was primarily due to the impact of Covid-19, which resulted in an increase in retail and corporate GNPA, according to a company statement. Besides, to mitigate impact of the pandemic, the company increased disbursements to salaried customers and reduced concentration of loans towards under-construction properties.

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