Markets regulator Sebi today exempted the central government from making an open offer to the public shareholders of United Bank of India (UBI). The central government, a promoter of UBI, has proposed to infuse capital in the lender. As part of capital infusion into the public sector lender, the government’s stake in UBI would increase by more than five per cent.
The move is part of government’s programme to shore up the bank’s capital base for meeting Basel norms. Under Sebi norms, acquiring more than five per cent stake in a listed entity in a financial year would trigger the obligation to make an open offer to the public shareholders.
After preferential allotment of shares, the central government’s stake in the bank would increase by 6.71 per cent to 88.71 per cent. Giving the exemption, Sebi said there would be no change in control of UBI pursuant to the proposed acquisition as the change would only be in the manner of holding of the shares by the government.
“Further, there will be no change in the number of equity shares held in the target company (UBI), by the public shareholders, pursuant to the proposed transactions,” the regulator’s Whole Time Member S Raman said in an order.
The exemption is subject to certain conditions, including that public shareholding in the bank “shall be increased to 25 per cent within a maximum period of 12 months from the date of the proposed preferential allotment”, Sebi noted.