Markets regulator Sebi Tuesday exempted the government from making an open offer to the shareholders of Punjab National Bank (PNB) following the proposed equity infusion that will hike its stake in the state-owned lender by nearly six per cent. The central government, a promoter of PNB, has proposed to infuse capital worth Rs 5,431 crore against allotment of equity on preferential basis.
The capital infusion is part of the government’s programme to help the bank in meeting capital adequacy norms. The government, presently, holds 66.09 per cent stake in the bank and the proposed allotment of 63,81,90,364 equity shares will increase its shareholding by around 5.83 per cent to 71.92 per cent, mandating an open offer under the Takeover Regulation.
The bank had filed applications with the markets regulator to seek exemption on behalf of its promoter. Subsequently, the Securities and Exchange Board of India (Sebi) in an order passed on Tuesday, said there would be no change in the management control post equity infusion in the bank and the infusion of additional capital will enable PNB to meet the stipulated capital adequacy norms.
“I am of the considered view that exemption as sought in the application made by the target company (PNB), be granted to the proposed acquirer –GOI,” Sebi Whole Time Member G Mahalingam said in a six-page order. Accordingly, the regulator has granted “exemption to the proposed acquirer — GOI — from complying with the requirements of… the Takeover Regulations with respect to the proposed acquisition of 5.83 per cent equity shares in the target company — PNB — during the financial year 2018–19, through the proposed preferential allotment”.
The exemption has been granted subject to the condition that the government or the bank would ensure compliance with the statements, disclosures and undertakings made with regard to the transactions, among others. Under the takeover norms, when entities which hold 25 per cent or more shareholding in a company acquire additional 5 per cent or more in that particular firm in a financial year, then they are required to make an open offer.
Earlier also, the government has been granted such exemptions in case of other state-owned entities in similar circumstances.