Mumbai: Carlyle’s group’s $1-billion-plus holding in mortgage lender PNB Housing Finance Ltd is now the private equity fund’s third biggest holding in any listed company, the group’s co-founder Bill Conway said.
Carlyle is a global alternative asset manager with $162 billion of assets under management across 287 investment vehicles as of 31 March.
Carlyle holds 37.55% stake in PNB Housing Finance, which went public in November 2016 after an initial public offering in which the company raised Rs3,000 crore. The IPO was subscribed 29.5 times.
Shares of PNB Housing Finance, which were sold at Rs775 in the IPO, listed at an 11% premium at Rs865, and last traded at Rs1,364.95 on the BSE on Wednesday. With this, the value of Carlyle’s holding has grown from Rs4,819.9 crore at the time of the IPO, to Rs8,488.9 crore ($1.32 billion).
The performance of its investment in PNB Housing has also provided a significant boost to its Asia buyout fund, through which it holds the PNB Housing investment.
“In Asia buyout, our latest fund, Carlyle Asia Partners IV, appreciated 25% in the quarter on the back of strong appreciation in India-based PNB Housing and other investments. We have long felt that we have the best investment teams in China and Japan, and recently our business in India has become much more substantial. PNB Housing is now our third largest public position with a fair market value of over $1 billion,” said Conway in Carlyle’s first quarter earnings call on Wednesday.
According to a October research report by IDBI Capital, several factors make PNB Housing Finance an attractive company.
“Strong recent growth rate (approximately 60% CAGR FY14-FY16) that is bound to continue albeit at a more moderated pace, operating leverage advantage over medium term, a healthy housing and non-housing mix (70:30), and a well-diversified borrowing profile with the cost advantage of a AAA rated company,” the report said.
The company also has a robust origination to disbursal model with the requisite risk management structures, giving it the confidence to grow at the extremely fast pace at which it has been growing, the report added.
India also contributed to Carlyle’s exits in the first quarter of the calendar year, with the PE firm exiting its stake in Edelweiss Finance Services Ltd.
“We realized proceeds for our fund investors of $3.5 billion in the quarter and almost $29 billion over the last 12 months. We completed block sales in Focus Media and Bank of Butterfield, and closed transactions for ITRS in Europe and Edelweiss Financial Services in India,” said Conway.
Talking about the group’s strategy going ahead, co-founder David Rubenstein highlighted credit as an important area of growth for the firm.
“Already today, we have a leading global CLO (Collateralized Loan Obligation) business, a high performing distressed investing business, and a fully re-loaded energy credit business. We have several other credit strategies in place or in fundraising, and yet we see substantial white space to raise and invest new credit strategies for our LPs. We expect global credit to be approximately 20% of our fundraising target,” said Rubenstein.
Credit strategies the PE investor is keen to explore include real estate credit and opportunistic credit.