New Delhi: The board of Life Insurance Corp of India has given an in principle approval to acquire 14.9% stake in IDBI Bank Ltd, the bank said in a filing to the BSE on Tuesday.

“LIC has given its in principle approval for subscription of equity shares on preferential basis subject to its total exposure not exceeding 14.90% of post issue capital of IDBI Bank at any point of time," the filing said.

The Board of IDBI Bank will meet on August 31 to consider the proposal for seeking shareholder approval through Postal Ballot under Section 62(1)(c) of the Companies Act, 2013 for the preferential issue of capital to LIC, it added.

The Union Cabinet recently gave its nod for LIC’s proposal to acquire 51% stake in IDBI Bank through preferential offer of equity.

Besides, LIC also intends to make an open offer to minority shareholders of IDBI Bank. According to the Securities and Exchange Board of India’s (Sebi) takeover code, an acquirer has to make an open offer to shareholders of the target company on acquiring shares or voting rights of 25% or more.

LIC already holds 7-7.5% stake in IDBI Bank and will acquire the remaining for majority holding.

In June, the board of the Insurance Regulatory and Development Authority of India (IRDAI) permitted LIC to increase its holding from 10.82% to 51% in IDBI Bank.

IDBI Bank reported a net loss of 2,410 crore during the April-June quarter, its seventh consecutive quarterly loss. Its gross bad loan ratio worsened to 30%.

Although, the proposed acquisition by LIC would not bring any money to the government, the bank would get capital support between 10,000 crore and 13,000 crore, depending on the share price of the bank.

(With agency inputs)

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