Markets regulator SEBI on Friday exempted the central government from making an open offer for the shareholders of Union Bank of India following capital infusion. In February, the government proposed a capital infusion of Rs 4,112 crore in the public sector lender through preferential allotment of shares.
The infusion is to meet certain regulatory requirements.
After the preferential allotment, the shareholding of the central government is likely to increase from 67.43 per cent to 73.98 per cent, an increase of 6.55 per cent, which is in excess of 5 per cent during the current financial year 2018-19 thereby attracting takeover provisions.
Under the takeover norms, the acquirer is required to make a public announcement of an open offer to acquire shares in case the existing stake goes beyond a certain threshold.
According to the Securities and Exchange Board of India (Sebi), there will be no change in control of the bank pursuant to the proposed acquisition.
Further, there will be no change in the number of equity shares held in lender by the public shareholders, pursuant to the proposed transactions.
Accordingly, it grants “exemption to the proposed acquirer, viz. the Government of India, from complying with the requirements of Regulation 3(2) of the Takeover Regulations with respect to the proposed acquisition of 6.55 per cent equity shares in the target company viz. Union Bank of India,” Sebi said.
In February, the lender had filed an application on behalf of the central government seeking exemption from the applicability of Regulation 3(2) of the SAST (Substantial Acquisition of Shares and Takeovers) Regulations.