UCO Bank capital infusion: Govt gets open offer exemption

Market regulator Sebi today exempted the government from making an open offer to public shareholders of UCO Bank pursuant to its acquisition of an additional 7.53 per cent stake.
As part of capital infusion into the public lender, the government's stake in UCO Bank would increase by more than 5 per cent.
Under Sebi norms, acquiring more than 5 per cent stake in a listed entity in a financial year will trigger the obligation to make an open offer to public shareholders.
The central government already holds 72.83 per cent in the bank. In May 2016, the holding rose to 77.54 per cent.

With the latest acquisition, the government's stake will increase to 80.36 per cent, leading to open offer obligation as the total stake purchase will be more than 5 per cent in a financial year.
Granting exemption, Sebi said there will be no change in control of UCO Bank pursuant to the proposed 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 shares held in the target company (UCO Bank) by the public shareholders, pursuant to the proposed transactions," Sebi Whole-time Member S Raman said.

The watchdog also noted that infusion of additional capital will enable the lender to maintain a capital over and above the minimum requirement mandated under Basel III norms.
The capital infusion will provide the target company with an additional leverage for raising further equity capital at a later date, as and when the need arises, it added.
The exemption is subject to certain conditions, including that public shareholding in the bank "shall be increased to 25 per cent within a maximum period of 12 months from the date of the proposed preferential allotment", Sebi noted.