SEBI approves government's stake hike in IFCI to over 55% from less than 1%
MDT/PTI 25 September 2012

Last month, the cabinet approved a proposal for conversion of debentures worth Rs923 crore into shares of IFCI, that in turn raised government's stake to over 55% from less than 1%

 
New Delhi: Market regulator Securities and Exchange Board of India (SEBI) has approved a proposed hike of the government's stake in Industrial Finance Corporation of India Ltd (IFCI) to 55.57% to make it a state-run company, without triggering an open offer for shares of public investors, reports PTI.
 
The Union Cabinet last month approved a proposal for conversion of debentures worth Rs923 crore into shares of IFCI, following which the government's stake in the financial institution would rise to 55.57%, from a meagre 0.0000011% currently.
 
Subsequently, the Finance Ministry wrote to SEBI on 29th August, seeking an exemption from the requirement of making an open offer.
 
IFCI is into funding of industrial projects. It has no promoters but major shareholder is LIC.
 
As per SEBI's takeover norms, any stake purchase of 25% or more requires the acquirer to make an open offer for a further 26% stake from the public shareholders.
 
In an order, dated 24th September and released on Monday, SEBI said that it has decided to grant the exemption to the acquirer, the Government of India in this case, as the current proposal was in consonance with the previously declared government policy with regard to IFCI Ltd.
 
SEBI added that IFCI was made a public limited company with a view to make it a government company and a substantial amount of public funds have been infused into it.
 
SEBI's Whole-Time Member Rajeev Kumar Agarwal said that conversion of such debts into equity would provide "more accountability and would stand as an additional safeguard to the investment of such public funds.
 
"These observations also address the issues raised by the Target Company (IFCI) with respect to the interests of the investors...," he said.
 
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