Capital market watchdog Sebi has exempted the central government from making an open offer to shareholders of United Bank of India pursuant to equity infusion that would hike its stake in the lender to nearly 88%.
The government, which is the promoter of United Bank, has proposed to buy additional 18 crore shares in the lender through preferential allotment route in lieu of infusing R700 crore investment. With the equity infusion, government's stake in the bank would rise to 87.99% from 82.23%.
Sebi, in an order issued yesterday, exempted the government from making an open offer for the bank's shareholders citing that there would not be any change in management control post equity infusion.
The regulator said the minimum public shareholding level — which is 10% for public sector entities — will remain unaffected after the share purchase by the government. This was a “fit case to grant exemption” to government from the obligation to make an open offer as otherwise required under the takeover norms, Sebi said.
Under Sebi norms, when entities who hold 25% or more shareholding in a company acquire additional five or more in that particular firm, they are required to make an open offer.
The government has proposed to infuse R700 crore by acquiring 18,00,41,152 United Bank shares.