Temasek, GIC stake rise in ICICI Bank under scrutiny

The finance ministry and the Reserve Bank of India (RBI) has asked the Securities and Exchange Board of India (Sebi) to examine whether a proposal by Temasek Holdings and Government of Singapore Investment Corporation (GIC) to increase their stakes in ICICI Bank would trigger the takeover code under which they would have to make an open offer to buy an additional 20 per cent.

The Singapore government has sought clarification on a proposal for the two companies to increase their stakes in ICICI Bank to 20 per cent, each holding 10 per cent. This would collectively make them the largest shareholders in the country’s largest private bank. Currently, Life Insurance Corporate is the single largest shareholder with 9.38 per cent.

The two Singapore investment vehicles currently hold 10.3 per cent in the bank — Temasek 8 per cent and GIC 2.3 per cent.

Sebi is yet to take a final view on the issue, sources said. The issue hinges on whether the two entities should be treated as one entity or not.

An open offer is triggered when an entity acquires more than 15 per cent in a company. Under Indian takeover rules since both companies are owned by the Singapore government they would be seen as acting in concert and if their collective share goes beyond 15 per cent the takeover code will apply.

A government official, however, said the two companies had been treated as separate entities in the past, so the same argument could be applied this time too. The issue had cropped up around two years ago, when the central bank, finance ministry and Sebi had argued that the two needed to be treated as one entity. The decision to treat them separately was taken after the Prime Minister’s Office intervened.

Temasek has also pointed out to the RBI that under the Comprehensive Economic Cooperation Agreement signed by the Indian and Singapore governments SIC and Temasek are deemed separate entities for the purpose of the Sebi legislation.

Temasek has said the shares acquired or sought to be acquired by these entities cannot be regarded as being held under common ownership nor can these entities be deemed to be companies acting in concert.

A Temasek spokesperson did not reply to an emailed questionnaire. A mail sent to ICICI Bank on Saturday also did not elicit a response.