The government hinted on Tuesday that Life Insurance Corporation might seek an exemption from the Securities and Exchange Board of India (Sebi) from making an open offer to the minority shareholders of state-owned IDBI Bank, in which the insurer is set to buy a 51 per cent stake. "They (LIC) are exploring an open offer. It will either be exemption, otherwise an open offer," Subhash Chandra Garg, secretary, Department of Economic Affairs, who is also a member on the LIC board, said in release. A meeting of the LIC board was held in the national capital on Tuesday to "take necessary decisions" supporting their plan to acquire a 51 per cent stake in the bank. Garg said Sebi would take a call on the open offer. "Either exemption or not, that is for Sebi to decideàThe board once again approved acquisition of up to 51 per cent (in IDBI Bank). This has been done earlier and has been reiterated today," he said after the meeting. According to the Sebi's takeover code, an acquisition of more than 25 per cent in a listed entity is termed as control and requires an open offer. Under this arrangement, the acquiring company must make an offer to existing shareholders to buy an additional stake in the company. It is aimed at providing the shareholders an exit option, as there may be a management change after acquisition and investors may perceive potential risks in the business. According to sources, the 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. LIC is also in the process of picking up an additional 7 per cent stake in IDBI Bank through preference shares. With this, its total holding in the bank would rise to 14.9 per cent. At present, LIC holds a 7.98 per cent stake in the public sector bank.
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