SEBI nod for reclassification of govt stake in IDBI

NEW DELHI:  IDBI Bank on Thursday said the Securities Exchange Board of India (Sebi) has relaxed the norm related to reclassifying the government’s residual shareholding as public holding after privatisation. 
However, the market regulator has set a condition that the voting rights of the government can’t exceed 15% of the total voting rights of the bank. Besides this, the intention of the government to get its shareholding reclassified as public holding should be specified in the letter of offer dispatched to the shareholders of IDBI Bank in connection with the open offer made by the new acquirer.

“Further, the new acquirer has to ensure compliance with minimum public shareholding requirements within a period of one year from completion of offer in terms of the existing provisions of the SEBI regulations and the securities contract rules, 1997,” the bank said in a statement quoting a Sebi letter.

Post strategic disinvestment, IDBI Bank will have to make an application to the stock exchanges for reclassification of the government’s stake under the public category, the bank said. The regulator further directed the new acquirer to comply with the minimum public shareholding norms within one year of the sale, IDBI said.

SEBI relaxed the norms after finance ministry requested it to treat the government’s residual shareholding as public stake and purely financial investment. The government, along with the Life Insurance Corporation of India, will offload 60.72% stake in IDBI Bank and the last date for submission of the expression of interest is January 7, 2023. The Centre and LIC together hold 94.72% stake in the bank.

The successful bidder will have to make an open offer for acquiring 5.28% public shareholding. Post, stake sale, the government will own 15% shares, while LIC will hold 34%. The bidder will also have to compulsorily lock-in at least 40% of the equity capital for five years from the date of acquisition.