Sebi exempts govt from open offers for 6 PSBs after capital infusion

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 stateowned lenders, following capital infusion.

The exemption has also been given with regard to Syndicate Bank, Vijaya Bank, Bank of Baroda and Union Bank of India.

Following the capital infusion in these listed public sector banks, the government’s respective stakes would increase. Under

Sebi norms, if an entity whose shareholding in a listed company goes beyond a particular threshold, 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.

According to the orders, the infusion of additional capital by the government is stated to enable the six banks to meet regulatory norms. It would also provide these 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 5.21 per cent in PNB, 6.25 per cent in Canara Bank and 9.73 per cent in Syndicate Bank.

In the case of Vijaya Bank, the shareholding would go up 5.48 per cent while it would be additional stakes of 5.33 per cent and 11.91 per cent 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 the 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 of ~54.7 billion in PNB, ~48.7 billion in Canara Bank and ~28.4 billion in Syndicate Bank.

Besides, capital infusions of ~12.8 billion in Vijaya Bank, ~53.8 billion in Bank of Baroda and ~45.2 billion in Union Bank of India were proposed.

Under Sebi norms, if an entitywhose shareholding in a listed company goes beyond a particular threshold, it has to make an open offer