Markets regulator Sebi on Thursday exempted the government from making open offer to the shareholders of Canara Bank following the proposed equity infusion that would hike its stake in the lender by 7.9 per cent.
The directive comes after the bank filed an application in November on behalf of its promoter-- Government of India -- seeking exemption from the applicability of SAST (Substantial Acquisition of Shares and Takeovers) or Takeover Regulations.
The central government has proposed to infuse capital worth Rs 6,571 crore in the lender against allotment of equity on preferential basis in favour of it. The capital infusion is part of government's programme to shore up the banks capital base for meeting Basel norms.
The government, presently, holds 70.62 per cent stake in Canara Bank and the proposed allotment of 27,69,88,576 equity shares of the lender would increase its stake by 7.9 per cent to 78.52 per cent mandating an open offer under the Takeover Regulation.
Besides, subsequent to the proposed acquisition, the public shareholding in the bank will decrease from 29.38 per cent to 21.48 per cent.
In an order, Securities and Exchange Board of India (Sebi) said there would be no change in the management control post equity infusion in the bank and proposed infusion of additional capital will be utilised to improve the capital adequacy and to fund general business needs of the bank.
"There will be no change in control of the target company (Canara Bank) pursuant to the proposed acquisition as the change will only be in the quantum of shares held by the proposed acquirer (government)," it said.
Accordingly, the regulator has granted exemption to the government from complying with the requirements of Takeover Regulations with respect to the proposed acquisition of 7.9 per cent stake in Canara Bank during the financial year 201920, through the proposed preferential allotment.