Sebi exempts government from open offer to buy Vijaya Bank shares

Capital market watchdog Securities and Exchange Board of India (Sebi) on Monday exempted the central government from making an open offer to acquire additional 14.26 per cent holding in Vijaya Bank through conversion of Rs 1,200 crore worth of preferential shares.

The government, which is the promoter of Vijaya Bank, has proposed to buy more than 30.46 crore shares of public sector lender through conversion of Rs 1,200 crore of perpetual non-cumulative preference shares (PNCPS).

The proposed allotment of the equity shares would hike government shareholding in Vijaya Bank from 59.80 per cent to 74.06 per cent. This is an increase of 14.26 per cent stake by the government in the bank.

In an order on Monday, Sebi said the minimum public shareholding "would be maintained" even after the proposed increase in the shareholding of the government in the bank.

There would not be any change in the management control in the bank following the proposed transaction, the regulator further said.

"I am of the considered view that this is a fit case to grant exemption under...the Takeover Regulations to the GoI (Government of India) from the obligation to make an open offer... with respect to its proposed increase of shares/voting rights from 59.80 per cent to 74.06 per cent, pursuant to conversion of PNCPS into 30,46,45,849 equity shares to the GoI," Sebi whole-time member Prashant Saran said in the order.

The exemption has been granted subjected 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 had filed an application with the capital market regulator seeking the exemption on behalf of its promoter - the government - on January 20, 2014.

Generally, under Sebi norms, when entities who hold 25 per cent or more shareholding in a company acquire additional five or more in that particular firm, they are required to make an open offer. However, exemptions can be made in certain cases.