Dena Bank capital infusion: Govt gets open offer exemption

Markets regulator Sebi today exempted the government from making an open offer pursuant to to its acquisition of an additional 5.66 per cent stake in Dena Bank under its capital infusion plan.
The exemption has been granted subject to the condition that the government or the bank would ensure compliance with the statements, disclosures and undertakings made with regard to the transactions, among others.
The central government, which is the promoter of the bank, has proposed to acquire about 12.02 crore shares of Dena Bank following a proposed preferential allotment by the lender.
The bank had filed its applications with the regulator to seek exemption on behalf of its promoter, the Government of India, on September 1.

The government holds 62.89 per cent stake in the bank and the proposed allotment of shares would increase its shareholding by 5 per cent in the financial year mandating an open offer under the Takeover Regulation.
Post acquisition, the government's stake will go up to 68.55 per cent.

In an order, the Securities and Exchange Board of India (Sebi) said, "The proposed acquisition is necessitated on account of the GOI's objective that all public sector banks are adequately capitalised for ensuring compliance with BASEL III norms."
Granting exemption, Sebi said there will be no change in control of Dena 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 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, the regulator said.
Under Sebi norms, entities holding 25 per cent or more shares in a listed company need to make an open offer if they acquire additional 5 per cent stake or more in that company.

However, exemptions can be granted by Sebi in certain cases.