IDBI Bank on Tuesday said that the government will not participate in LIC’s open offer related to its acquisition of 51 per cent controlling stake in the state-owned bank.
LIC’s open offer to purchase 26 per cent stake in IDBI Bank opened on December 3 and will close on December 14.
In October, LIC had announced an open offer for acquiring 26 per cent stake in IDBI Bank at Rs 61.73 per share, entailing a total payout of over Rs 12,602 crore.
“IDBI Bank is in receipt of letter dated December 03, 2018 from the Government of India confirming that the Government of India will not participate in the open offer made by LIC,” IDBI Bank said in a regulatory filing.
Earlier, IDBI Bank board had approved the proposal for issuance of preferential shares in favour of LIC to increase the share of insurer in the bank up to 51 per cent.
It had approved allotment of 33.98 crore equity shares to LIC at Rs 61.73 per share inclusive of a premium amount of Rs 51.73 per share aggregating up to Rs 2,098.19 crore through a preferential issue.
Subsequently, LIC then came out with an open offer for acquiring 26 per cent of equity in IDBI Bank at Rs 61.73 per share.
The Insurance Regulatory and Development Authority of India in June had permitted LIC to increase its stake from 10.82 per cent to 51 per cent in the IDBI Bank. As per current regulations, an insurance company cannot own more than 15 per cent in any listed financial firm.
In August, the Cabinet had approved acquisition of controlling stake by LIC as promoter in the bank through preferential allotment/open offer of equity, and relinquishment of management control by the government in the bank.