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 100- Rs130 billion.
Share Market News » 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 100- Rs130 billion.
"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 220 million policy holders and subsequent flow of fund.
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