SEBI to relax rules for government's stake sale in IDBI Bank; details here

The Centre had earlier urged the Securities and Exchange Board of India (SEBI) to relax the mandatory public shareholding norms for the IDBI Bank’s potential acquirer by treating the combined residual stake of LIC and the government after the strategic sale as part of the public float. Now, the SEBI is expected to relax the rules for the same, facilitating IDBI Bank’s proposed sale to a strategic buyer. The relaxation by the regulator is likely to make it easier for the potential buyer in meeting the minimum public float norm and hence improve the interest of investors in the entity. As per the SEBI norms, a company needs to have 25 percent minimum public holding within a year of merger with/acquisition of a private company or three years after listing. However, public sector firms such as Bank of Maharashtra and Indian Overseas Bank enjoy liberty in this regard despite the fact that they were listed decades ago as in their cases, these norms were not enforced strictly. The Centre invited Expression of Interests (EoIs) for IDBI Bank on 7 October, and offered to sell 60.72 percent stake in the bank. Out of the 60.72 percent stake, 30.48 percent was from the government and 30.24 percent from LIC. But the government and LIC will have a residual stake of 34 percent in the bank, 15 percent by the government and 19 percent by the LIC. The stake sale has been structured by the government in such a way that the buyer can increase its stake potentially to about 66 percent through acquiring 5.28 percent held by the public through open offer. As per the SEBI’s takeover regulations, if the acquisition in a listed entity amounts to an aggregate of 25 percent shares, an open offer would be triggered. The SEBI’s expected categorisation of the Centre’s residual stake of 15 percent in the bank would imply that the bank’s new promoters would require to sell just another 10 percent in order to meet the public float norm of 25 percent. Read all the Latest News , Trending News ,  Cricket News , Bollywood News , India News and Entertainment News here. Follow us on Facebook, Twitter and Instagram.