Sebi exempts Educomp's CMD from making open offer

Market regulator Sebi has exempted Educomp Solutions Chairman and Managing Director Shantanu Prakash from making an open offer with respect to his proposed acquisition of 7.5% stake in the company.

The Securities and Exchange Board of India (Sebi) has granted the exemption on the grounds that the proposed acquisition would not result in any change in control of the management of Educomp as Prakash belonged to the promoter group which is already in control of the company.

In its order dated May 31, Sebi has said it considered the "present case a fit one for granting exemption from the applicability...The Takeover Regulations, as sought for by the Acquirer (Prakash)".

Following the share-purchase, Prakash's shareholding in the company would increase from 28.70% to 36.20%, while that of the promoter group would go up to 44.80% from 37.30%.

In March, Prakash had sought the exemption from Sebi's takeover norms regarding his proposed purchase of 91.80 lakh shares (about 7.50% of shareholding) of the company.

As per the norms, a person planning to acquire 25% or more shares in a target company cannot do so without making a public announcement of an open offer for acquiring the shares.

Prakash had pledged 91.80 lakh shares of Educomp as security with Macquarie against its loan of Rs 46 crore. Later, Macquarie had invoked the pledge and transferred them in its name.

Sebi has observed that "though pledge was invoked, the lender has not sold the shares that were pledged".

It further noted that Prakash had fully settled the loan due to Macquarie and that latter was willing to transfer the said shares.

In this regard the regulator has said that "no fresh consideration is required for the proposed transfer of shares to the acquirer (Prakash) and that pursuant to the said transfer, the acquirer would receive back his shares which he had pledged with Macquarie".

Among other things, Sebi also noted that following the proposed acquisition of shares, Educomp would continue to be in compliance with the minimum public shareholding norms.