RBI restrictions on Diageo's open offer for 26% more in USL

The Reserve Bank of India (RBI) has put some restrictions to Diageo's open offer to acquire an additional 26 per cent in United Spirits, the country's largest company in this segment.

The Rs 11,500-crore offer opened on June 6 and will end on June 19. The restrictions are a result of RBI's move to restrict two entities from tendering their USL shares to Diageo.

According to a disclosure to the BSE exchange from JM Financial and HSBC Securities, managing the offer on behalf of Diageo, RBI had directed that Mia and Sons and Ansupa Investments, both being erstwhile Overseas Corporate Bodies (OCB), shall not tender any equity shares in the offer. Additionally, RBI has directed that in the absence of prior Foreign Investment Promotion Board approval, Habib Bank shall not tender any equity shares in the offer. It is not yet clear how much the two entities hold.

RBI has further advised seeking a separate approval from it for acquisition of equity shares tendered in the offer by any non-resident Indians (NRIs) or Overseas Corporate Boaides (OCBs) and/or OCBs other than the identified NRIs and OCBs.

Diageo had applied to RBI for acquisition of offer shares from NRIs and OCBs, as required in the Foreign Exchange Management Act. RBI has said it has 'no objection' in respect of acquisition of 688,133 shares under the offer from those NRIs, subject to the condition that the consideration may be credited to the non-resident ordinary account of the identified NRIs if the equity shares were acquired on a non-repatriation basis out of rupee resources.