Markets regulator Sebi today exempted the government from making an open offer pursuant to to its acquisition of additional 8.5 per cent stake in Andhra Bank under a capital infusion plan. The exemption granted is subject to few conditions such as the acquisition should be in compliance with the Companies Act and any other applicable law. The government already holds 61.26 per cent shares in Andhra Bank. Post acquisition, its stake will go up to 69.76 per cent. "The proposed acquisition is necessitated on account of the Government of India's objective that all Public Sector Banks are adequately capitalized for ensuring compliance with Basel III norms," Securities and Exchange Board of India (Sebi) said. As per Sebi's Takeover regulations, no entity can acquire more than five per cent of the additional shares or voting rights within any financial year unless the acquirer makes a public announcement of an open offer for acquiring shares of the target company. Granting exemption, Sebi said there will be no change in control of Andhra Bank pursuant to the acquisition as the change will only be in the manner of holding the shares by the government. Further, there will be no change in the number of equity shares held in the bank, by the public shareholders, pursuant to the proposed transactions, it added. The government, in March, had proposed capital infusion of Rs 1,100 crore in Andhra Bank in lieu of a proposed preferential allotment of over 19.16 crore equity shares. This was subsequently approved by the board of directors of the bank. The infusion of additional capital by the government will enable the bank to maintain a capital over and above the minimum requirement mandated under Basel III norms and will also provide the bank with additional leverage for raising further equity capital at a later date, as and when the need arises, Sebi said.
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