Sebi exempts govt from open offer for Allahabad Bank post capital infusion

Markets regulator Sebi today exempted the central government from making an open offer for the shareholders of Allahabad Bank following capital infusion.

In January this year, the government had proposed capital infusion to the tune of Rs 1,500 crore in the public sector lender.

According to a Sebi order, the infusion of additional capital by the government is stated to enable Allahabad Bank to meet regulatory capital norms.

It would also provide the public sector lender with an additional leverage for raising further equity capital at a later date, as and when the need arises, the regulator said.

Following the capital infusion in the public sector lender, the government's stake would rise in it by 7.03 per cent. Under Sebi norms, if the shareholding of an entity in a listed company goes beyond a particular threshold, then it has to make an open offer.

As per Sebi, there would be no change in control of the lender pursuant to the proposed acquisition of additional shares by the government.

"Further, there will be no change in the number of equity shares held in the target company (Allahabad Bank), by the public shareholders, pursuant to the proposed transactions," Sebi said.

In March, the lender had filed an application on behalf of Indian government seeking exemption from the applicability of Regulation 3(2) of the SAST (Substantial Acquisition of Shares and Takeovers) Regulations.

Regulation 3(2) requires an acquirer to make a public announcement of an open offer for acquiring shares in case the existing stake goes beyond a certain threshold.

Earlier this year, Sebi had exempted the central government from making an open offer for the shareholders of several lenders including Punjab National Bank, Canara Bank, Syndicate Bank, Vijaya Bank, Bank of Baroda and Union Bank of India, following capital infusion.