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.
No impact on the credit rating of IDBI
Mumbai: Ratings agency ICRA Ltd on Tuesday said ownership change of IDBI Bank is unlikely to have any significant impact on the credit rating of the bank. The current rating of the bank factors in the government support, it said.
“Hence, acquisition of stake by Life Insurance Corporation of India, with equally strong ability to infuse capital, is unlikely to drive the credit profile in near term till there is an improvement in the standalone profile of the bank,” ICRA said.
