Government sweetens deal for IDBI bidders
NEW DELHI: With the government eyeing the strategic sale of IDBI Bank, it has exempted listed central and state PSUs from complying with the mandatory 25% public shareholding norms for listed companies.
The finance minister issued a notification in this regard late on Monday night. The notification said:
“Notwithstanding anything, the central government may, in the public interest, exempt any listed entity in which central or state government or public sector company, either individually or in any combination with other, hold directly or indirectly, majority of the shares or voting rights or control of such listed entity, from any or all of the provisions of this rule (minimum public shareholding norm).”
The notification specifies that the exemption would be for a specific period, irrespective of any change in control of such listed entity subsequent to issuance of such exemption. The notification comes at a time when the government is eyeing a stake sale in IDBI Bank, in which the government and the Life Insurance Corporation (LIC) hold 94.71%. The government is looking to offload 60.72% in the state-owned bank. The successful bidder will also have to make an open offer for acquisition of 5.28 per cent stake from public shareholders.
This could possibly lead to a situation where the bidder would end up owning more than 65% in IDBI. The government has extended the period for inviting expression of interest (EoI) for IDBI Bank to 7 January 2023. “It is not easy to raise capital in difficult global conditions and volatile markets. Considering the above fact, in order to comply with the one with listing regulation, the government is looking at exempting minimum shareholding norms,” says S Ravi, former BSE Chairman and founder and managing partner of Ravi Rajan & Co. Poonam Kaura, Partner - government and public sector advisory, Nangia Andersen, feels though the exemption will be for a specified period, it will have a positive impact on central and state PSUs undergoing strategic disinvestment or privatization.
New public shareholding rule
Govt exempts listed central and state PSUs from following minimum shareholding norm
Sebi norms require listed companies to have minimum 25% public shareholding
Exemption will be for a specified period, irrespective of any change in control of such listed entity
The notification comes at a time when the govt is inviting EoI for IDBI Bank
Govt and LIC together hold 94.71% in IDBI Bank and wants to sell 60.72% stake in the bank