Open offer exemption possible in Jet-Etihad case: Sebi to SBI
MUMBAI: State Bank of India (SBI) chairman Rajnish Kumar met Securities and Exchange Board of India (Sebi) chairman Ajay Tyagi on Wednesday to discuss Etihad Airways PJSC’s demand for an open offer exemption before investing in cashstrapped Jet Airways (India) Ltd, two people aware of the matter said.
Under Sebi’s takeover code, any company acquiring control in a listed company, or when its stake crosses 25%, must make an open offer to its minority investors. Etihad, which owns 24% in Jet Airways, is willing to bring in more money, but that would trigger the open offer threshold. The Gulf airline says it will invest only if it is allowed an exemption and if Jet Airways founder Naresh Goyal exits the airline.
“SBI chairman Kumar met with Ajay Tyagi, Sebi chairman, to understand provisions under which open offer exemption is possible in the case of Jet Airways bailout,” said the first of the two people, both of whom spoke on condition of anonymity.
“The SBI chairman also wanted to understand if Sebi is inclined to provide such an exemption,” the person added.
Kumar and Tyagi also dis- cussed Goyal’s rival offer to invest up to ₹700 crore and pledge all his shares, provided he retains at least a 25% stake in the airline. Goyal and his family together own 51% of Jet Airways.
“Though Goyal’s offer was discussed, the talks between the two mostly involved Etihad’s offer (to pick up additional stake in Jet Airways),” said the second person.
“The Sebi chairman told the SBI chairman that an open offer exemption is possible under the takeover code to save a company in the larger investors’ interest. Sebi asked SBI to make a formal representation on this,” added the second of the two people cited earlier.
An open offer exemption may also require a reference from the aviation regulator, Directorate General of Civil Aviation, or the civil aviation ministry.
However, the markets regulator can use sections 10 and 11 of the Substantial Acquisition of Shares and Takeovers, or the takeover code, which allows exemptions under special circumstances.
Section 10 of the Sebi takeover code allows exemption if it is made under section 18 of the Sick Industrial Companies (Special Provisions) Act, 1985, or any statutory modification or re-enactment. Section 11 empowers the Sebi board to allow exemptions if it deems it a fit case in the interest of investors in securities.
The two sections are frequently used to give exemptions to public sector banks and undertakings when the government recapitalizes them.