New Delhi: IDBI Bank on Tuesday said government will not participate in Life Insurance Corporation’s (LIC’s) open offer to acquire 51% stake in the bank. LIC’s open offer to purchase 26% shares of IDBI Bank opened on 3 December and will close on 14 December. In October, LIC announced an open offer for acquiring 26% of equity in IDBI Bank at a price of 61.73 per share, entailing total payout of over 12,602 crore.

“IDBI Bank is in receipt of letter dated December 03, 2018 from Government of India confirming that Government of India will not participate in the open offer made by LIC," IDBI Bank said in a regulatory filing. Earlier, IDBI Bank board approved the proposal for issuance of preferential shares in favour of LIC to increase the share of insurer in the bank up to 51%.

The IDBI Bank’s board had approved allotment of 33.98 crore equity shares to LIC at a price of 61.73 per share inclusive of premium amount of 51.73 per share aggregating up to 2,098.19 crore through preferential issue.

Subsequently, LIC then came out with an open offer for acquiring 26% of equity in IDBI Bank at 61.73 per share.

The Insurance Regulatory and Development Authority of India (IRDAI) in June had permitted LIC to increase its stake from 10.82% to 51% in the IDBI Bank. As per current regulations, an insurance company cannot own more than 15 per cent in any listed financial firm.

In August the Cabinet had approved acquisition of controlling stake by LIC as promoter in the bank through preferential allotment/open offer of equity, and relinquishment of management control by the government in the bank.

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