The board of Life Insurance Corporation board, which met on Tuesday, decided on the modalities of increasing its stake to 51 per cent in the state-owned IDBI Bank. LIC is also exploring an open offer for shareholders of the bank. The process is to be completed, so the board has taken necessary decisions, Department of Economic Affairs Secretary Subhash Chandra Garg, who is also a member of the LIC board, said after the meeting.
“The board once again approved to acquire up to 51 per cent. This has been done earlier and has been reiterated today,” he said. The time table has been decided and an open offer is being explored; “either exemption or not, that is for SEBI to decide,” he said without disclosing the timeline. As per the Securities and Exchange Board of India (SEBI) Takeover Norms, if an acquirer picks up more than 25 per cent stake in a target company, it is required to make an open offer to other shareholders including the minority shareholders in order to offer them an exit option.
Sources said LIC board has decided on appointment of a merchant banker and a legal advisor to carry out the acquisition process. The board asked the insurer to do due diligence of the bank and then proceed for various regulatory clearances. The government owns 85.96 per cent stake in IDBI Bank, while LIC has 7.98 per cent shareholding in the lender, as per the June-end shareholding details available with the BSE. LIC last week proposed to increase its equity stake in IDBI Bank up to 14.9 per cent through a preferential issue.