Omkara ARC has secured a significant loan of Rs 784 crore from PNB Housing Finance through an all-cash deal facilitated by Joyous Housing Limited. This move aids PNB Housing Finance in addressing a substantial non-performing asset on its balance sheet. Joyous Housing, who defaulted on a secured construction finance of Rs 800 crore from PNB Housing, played a role in this transaction. The loan resolution was accomplished through the 'Swiss Challenge' method, marking a strategic step for both parties. PNB Housing Finance had recently raised capital through a successful rights issue involving key stakeholders like PNB, Carlyle, Ares SSG, and General Atlantic. The company has been working on improving its asset quality and reducing its stressed portfolio through various means.
Omkara ARC has undertaken a significant financial move, securing a substantial loan of Rs 784 crore from PNB Housing Finance, facilitated by Joyous Housing Limited. This transaction, executed at par, plays a pivotal role in PNB Housing Finance's effort to address a significant nonperforming asset on its balance sheet. Well-informed sources affirm that Omkara ARC conducted the acquisition with precision through an all-cash deal. PNB Housing Finance recently announced the successful resolution of a substantial corporate non-performing loan (NPA) valued at ?784 crore. This NPA constituted around 1.3 percent of their credit assets as of June 30, 2023. The finalization of this account occurred on August 19, 2023, following the completion of the ARC sale through the innovative 'Swiss Challenge' method.
It's pertinent to note that Joyous Housing defaulted on repaying a significant portion of the secured construction finance, amounting to Rs 800 crore, provided by PNB Housing. As of June 30, GNP Housing Finance reported a gross NPA of Rs 2,270 crore, equating to 3.76 percent of its total loan portfolio. Their cumulative loans extended by the company reached an impressive Rs 60,395 crore.
PNB Housing Finance has recently taken significant strides to reinforce its financial position. In a capital-raising endeavour, the company successfully raised Rs 2,493.7 crore through a rights issue in May. Notably, this offering witnessed participation from significant stakeholders, including PNB, Carlyle, Ares SSG, and General Atlantic. As of June 30, Carlyle holds a 32.7 percent stake, PNB owns 28.2 percent, and Ares SSG maintains a 9.9 percent stake in the company. These entities collectively hold strategic stakes in the company, underscoring investor confidence. The mortgage lender experienced a marked transformation in asset quality, with its gross non-performing loan ratio rising from 0.5 percent on March 31, 2019, to 8.1 percent on March 31, 2022.
However, the company effectively reduced its stressed portfolio through legal proceedings, one-time settlements, and write-offs. This substantial effort led to a commendable improvement in the gross delinquency ratio, which stood at 3.83 percent as of March 31 of the current year. Meanwhile, PNB Housing's GNPA witnessed a rise from Rs 2,997 crore in 2020–21 to Rs 4,705 crore in 2021–22, but subsequently declined to Rs 2,824 crore by December 31, 2022. The increase in 2020–21 and 2019–20 was largely attributed to the influence of Covid-19, which significantly impacted both retail and corporate GDP, according to the company's official statement. Additionally, to mitigate the pandemic's impact, the company ramped up disbursements to salaried clients and diversified its loan concentration away from properties under construction.
Omkara operates as an asset reconstruction company with a nationwide presence, catering to various sectors. Its core objective is to support legitimate borrowers by restructuring loans and extending settlement timelines. Additionally, Omkara acts as an intermediary to facilitate amicable settlements for eligible borrowers. Conversely, it rigorously follows legal provisions to recover outstanding amounts from uncooperative borrowers, leaving no stone unturned in the pursuit of dues.
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