SEBI exempts govt from open offers for 6 PSBs post capital infusion

SEBI exempts govt from open offers for 6 PSBs post capital infusion

Sebi has given exemption from open offer requirements with respect to six lenders—PNB, Canara Bank, Syndicate Bank, Vijaya Bank, Bank of Baroda and Union Bank of India

Markets regulator Securities and Exchange Board of India (Sebi) on Monday exempted the central government from making an open offer for the shareholders of Punjab National Bank (PNB), Canara Bank and four other state-owned lenders following capital infusion.

The exemption has been given with regard to Syndicate Bank, Vijaya Bank, Bank of Baroda and Union Bank of India also. Following capital infusion in these listed public sector banks, the government’s respective stakes would rise in them.Under Sebi norms, an entity whose shareholding in a listed company goes beyond a particular threshold, then it has to make an open offer. Sebi has given exemption from open offer requirements with respect to the six lenders through six separate but similarly-worded orders.

According to the regulator, there would be no change in control of the banks 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 by the public shareholders, pursuant to the proposed transactions,” Sebi said in the order regarding Punjab National Bank.

As per the orders, the infusion of additional capital by the government is stated to enable the six banks to meet regulatory capital norms. It would also provide them with additional leverage for raising further equity capital at a later date as and when the need arises, the regulator said.

Pursuant to the capital infusion, the government’s stake would rise by 5.21% in Punjab National Bank, 6.25% in Canara Bank and 9.73% in Syndicate Bank. In the case of Vijaya Bank, the shareholding would go up by 5.48% while it would be additional stakes of 5.33% and 11.91% in Bank of Baroda and Union Bank of India, respectively.

The acquisition is on preferential allotment basis for the financial year 2017-18. In February, the six lenders had filed separate applications 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 making a public announcement of an open offer for acquiring shares in case the existing stake goes beyond a certain threshold. In January this year, the government had proposed infusion to the tune of Rs5,473 crore in Punjab National Bank, Rs4,865 crore in Canara Bank and Rs2,839 crore in Syndicate Bank.Besides, capital infusions of Rs1,277 crore in Vijaya Bank, Rs5,375 crore in Bank of Baroda and Rs4,524 crore in Union Bank of India were proposed.

The Mint, New Delhi, 20th March 2018