Markets regulator Sebi has exempted Jammu and Kashmir government from making an open offer to shareholders of Jammu & Kashmir Bank following proposed equity infusion that would hike its stake in the lender by 8.95 per cent.
The order comes after the bank filed an application in February on behalf of its promoter — Government of Jammu & Kashmir — seeking exemption from applicability of SAST (Substantial Acquisition of Shares and Takeovers) or Takeover Regulations.
The government has proposed to infuse Rs 500 crore in the lender against allotment of equity on preferential basis in favour of it.
The government, presently, holds 59.23 per cent stake in Jammu & Kashmir Bank, and the proposed allotment of 15,65,92,546 equity shares of the lender would increase its stake by 8.95 per cent to 68.18 per cent.
The government's holding will increase by more than 5 per cent during the financial year 2019-20, mandating an open offer under the Takeover Regulation.
Besides, the public shareholding in the bank will decrease from 40.77 per cent to 31.82 per cent subsequent to the proposed acquisition.
In an order passed on Wednesday, the Securities and Exchange Board of India (Sebi) said there would be no change in management control post equity infusion in the bank, and the proposed infusion of additional capital will be utilised to improve capital adequacy and to fund general business needs of the bank.
"There will be no change in control of the target company (Jammu & Kashmir Bank) pursuant to the proposed acquisition as the change will only be in the quantum of holding the shares by the proposed acquirer/promoter (government)," it said.
Accordingly, the regulator granted exemption to the government from complying with the requirements of Takeover Regulations.