SEBI exempts the GoI from an open offer to acquire additional 7.94% stake in UCO Bank through conversion of Rs1,823 crore worth perpetual non-cumulative preference shares
Market regulator Securities and Exchange Board of India (SEBI) has exempted the union government from making an open offer in UCO Bank. The government is raising its stake to 77.2% after buying additional 7.97% stake in the Bank by conversion of perpetual non-cumulative preference shares (PNCPS) worth Rs1823 crore and additional capital infusion of Rs200 crore.
In an order, SEBI’s whole time member Prashant Saran said, "I am of the considered view that this is a fit case to grant exemption under regulation 11 of the Takeover Regulations to the GoI from the obligation to make an open offer under regulation 3(2) of the Takeover Regulations with respect to its proposed increase of shares/ voting rights from 69.26% to 77.20%.
The government proposed to acquire 26.21 crore shares in the state-run lender to increase its stake to 77.20% from 69.26%. The bank has fixed issue price of Rs77.19 per equity share of Rs10.
Source: www.sebi.gov.in
Earlier on 18 January 2014, UCO Bank had filed an application with the capital market regulator seeking the exemption on behalf of its promoter, the Government of India.
In an order SEBI also said that even after the proposed increase in the shareholding of the government in UCO Bank, the minimum public shareholding would be maintained and there would be no change in the management control in the bank following the proposed transaction.
As per SEBI norms, when any entities who hold 25% or more shareholding in a company are required to make an open offer to acquire additional 5% or more in the company. However, exemptions can be made in certain cases.
The exemption has been granted subject to conditions that the government or the bank would ensure compliance with the statements, disclosures and undertakings made with regard to the transactions, among others.
UCO Bank closed Wednesday marginally down at Rs63.7 on BSE, while the 30-share Sensex ended marginally up at 20,986.
Markets are closed on Thursday on occasion of Maha Shivratri.
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Now, they are simply increasing the holding in UCO bank. At the same time, they are in the process of issuing licences for private banks to come in and Jalan Report is already under final review. If Chief Election commissioner has no on bjection, which is likely soon, RBI will announce names of the successful applicants who submitted the application for a banking licence!
I personally think that it is time that GoI decides not to hold more than 26% in any enterprise, except defence and others relating to strategic matters of national security.
Similarly, I cannot recall which bank, maybe it was Corporation bank, that offered and alloted preferential shares to GOI.
GOI must impose self control and not hold than 26% with immediate effect; if they have more than this percentage, they should dispose it off.