Afternoon D & C Dedicated To Mumbai
Home > Business > 'LIC to make open offer to IDBI Bank shareholders'

'LIC to make open offer to IDBI Bank shareholders'

Wednesday, July 11, 2018

New Delhi: Insurance behemoth LIC will make an open offer to minority shareholders of IDBI Bank in which it proposes to acquire up to 51 per cent equity, source said.

The state-owned life insurer will approach market regulator Sebi after getting approval from its board for acquiring stake in the state-owned bank
Insurance regulator Irdai has already given its approval to LIC for the stake purchase, a move which will help the debt-ridden bank get a capital support of Rs 10,000-Rs 13,000 crore.

"The LIC-IDBI Bank deal will trigger an open offer to protect the interest of minority shareholders in the bank," sources said.

As per SEBI takeover code rules, an acquirer has to give an open offer to the shareholders of target company on acquiring shares or voting rights of 25 per cent or more.

According to sources, the board of Insurance Regulatory and Development Authority of India (Irdai), at its meeting held in Hyderabad last month, had permitted Life Insurance Corporation (LIC) to increase its stake from 10.82 per cent to 51 per cent in IDBI Bank.

As per current regulations, an insurance company cannot own more than 15 per cent in any listed financial firms.

LIC has been looking to enter the banking space by acquiring a majority stake in IDBI Bank as the deal is expected to provide business synergies despite the lender's stressed balance sheet.

For LIC it will get about 2,000 branches through which it can sell its products while the bank would get massive funds of LIC.

The bank would also get accounts of about 22 crore policy holders and subsequent flow of fund.

If the deal goes through IDBI Bank, which is grappling with mounting toxic loans with gross non-performing assets rising to a staggering Rs 55,600 crore at the end of latest March quarter, will get much needed capital support to revive its fortune. During the period, the lender's net loss stood at Rs 5,663 crore.

The government would not get the proceeds from the stake reduction as the money would be utilised for the bank's revival. It could happen through issuance of fresh equity so that the government's stake which is presently at 80.96 per cent would come down below 50 per cent as announced in the Budget.

COMMENTS
No Comments Posted
POST YOUR COMMENTS
Name:  
 
Email:    
Comments:
 
 
City news
Over a crore collected in fines
Seek change in land use at par with ...
Pretending to be Chota Shakeel aide, accused firs
I am a married man, now 49 years of age, a CA by
Dr. Rajan B. Bhonsle, M.D. (Bom)
Consulting Sex Therapist & Counsellor
Dr. (Mrs.) Minnu R. Bhonsle, Ph.D.
Consulting Psychotherapist & Counsellor
Astrology
Select Sun sign:
 
Aries (Mar 21 - Apr 20)
Aries (Mar 21 - Apr 20)The day sparkles with opportunities and pleasures, you just have to look in the right place. If you've been looking to seal a relationship, today is the day to propose, says Ganesha! Be careful while driving, and be subtle in suggestion. Towards this end, success will smile upon you.
- Advertising -
Diabetes is a growing challenge in India which ca
Payal Kothari offers some clever food and drink h
As scalps get dry and itchy this winter, Dr Arvin
Read More