Government to increase stake in Vijaya Bank to 74.06%
Moneylife Digital Team 19 February 2014

SEBI exempts the GoI from an open offer to increase 14.26% stake in Vijaya Bank through conversion of perpetual non-cumulative preference shares worth Rs1,200 crore

Market regulator, Securities and Exchange Board of India (SEBI) in its order dated 17 February 2014, exempted the Government of India (G0I) from making an open offer to acquire additional 14.26% stake in Vijaya Bank through conversion of Rs1,200 crore worth of perpetual non-cumulative preference shares (PNCPS) into equity shares.
 

SEBI, whole time member Prashant Saran said in the order: "I am of the considered view that this is a fit case to grant exemption under The Takeover Regulations to the GoI from the obligation to make an open offer with respect to its proposed increase of shares/voting rights from 59.80% to 74.06%, pursuant to conversion of PNCPS into 30.46 core equity shares to the GoI,"
 

The GoI which is also the promoter of the public sector lender, proposed to acquire 30.46 crore more shares to increase its shareholding in Vijaya Bank to 74.06% from 59.80%. The bank has fixed issue price of Rs39.39 per equity share of Rs10.
 

Earlier on 20 January 2014, Vijaya 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 Vijaya 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.
 

Vijaya Bank closed marginally down on Wednesday at Rs35.10 on BSE, while the 30-share benchmark Sensex ended the day flat at 20,722.

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