Sebi exempts govt from making open offer in IOB case

Capital markets regulator Sebi today exempted government from making open offer to pick up an additional stake in Indian Overseas Bank through preferential allotments.
The central government, which is the promoter of the bank, has proposed to acquire more than 48.56 crore shares of Indian Overseas Bank (IOB) following a proposed preferential allotment by the lender.
The government presently holds 73.80 per cent stake in the bank and the proposed allotment of shares would increase the shareholding by five per cent in the financial year mandating an open offer under the Takeover Regulation.
In an order, the Securities and Exchange Board of India (Sebi) said there would not be any change in the management control in the bank following the proposed transaction.

The regulator further said this was a 'fit' case to grant exemption under the Takeover Regulations to the government from the obligation to make an open offer with respect to its proposed increase of shares/voting rights in IOB, pursuant to proposed preferential allotment of equity shares.
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 bank had filed their applications with the markets regulator to seek exemption on behalf of their promoter, the Government of India, last month.

Under Sebi norms, generally entities holding 25 per cent or more shares in a listed company need to make an open offer if they acquire additional five per cent stake or more in that company.
Through the open offer, the acquirer is required to acquire shares from the minority shareholders as well.
However, exemptions can be granted by Sebi in certain cases.
Earlier also, the government has been granted such exemptions in case of other state-run entities in similar circumstances.