Sebi will decide on LIC’s open offer for IDBI Bank, says Garg
Life Insurance Corp. of India (LIC) is mulling whether to make an open offer for IDBI Bank’s minority investors or seek an exemption from the Securities and Exchange Board of India (Sebi). The LIC board met in New Delhi on Tuesday to finalize the contours of its purchase of a majority stake in stateowned IDBI Bank.
The board also finalized the time table for the completion of the deal, said Subhash Chandra Garg, secretary, department of economic affairs, without disclosing the timeline.
Garg, who is also a member of the LIC board, added that the capital markets regulator will take the final call on the open offer. The insurance behemoth is set to pick up a 51% stake in IDBI Bank for ₹10,000-13,000 crore. It will also receive promoter status and management control.
As of June-end, LIC had a 7.98% stake in the bank, with the government holding at 85.96%.
The Union cabinet had approved the deal in August, but it is awaiting approval from the Reserve Bank of India (RBI) and the Insurance Regulatory and Development Authority of India (IRDA).
Pending approvals, LIC will increase its stake in IDBI Bank by another 7% through a preferential issue, raising its stake to 14.9%. This will provide the bank with the much needed capital to meet the Basel 3 norms. The government has been trying to privatize IDBI Bank for the past couple of years amid mounting losses and rising bad loans.