New Delhi: IDBI Bank Tuesday said Life Insurance Corporation (LIC) will buy additional 7 per cent stake in the bank, a move that will eventually lead to acquisition of 51 per cent shareholding in the lender.
The first round of stake sale will help the debt-ridden lender to meet immediate capital requirement, sources said. In August, the Union Cabinet had approved LIC’s proposed acquisition of up to 51 per cent stake in debt-ridden IDBI Bank.
At present, insurance behemoth LIC holds 7.98 per cent stake in the debt-ridden public sector bank. “The Bank has received a letter dated August 28, 2018 from LIC giving their in principle approval for subscription of the equity shares on preferential basis subject to their total exposure not exceeding 14.90 per cent of post issue capital of IDBI Bank at any point of time,” IDBI Bank said in a regulatory filing.
The board at its meeting, to be held on August 31, will consider the proposal for seeking shareholders’ approval through postal ballot for preferential issue of capital to LIC, aggregating up to 14.90 per cent of the bank’s post issue paid up capital, it added.
This first round of stake sale, the sources said, will take care of the immediate need of IDBI Bank and help it meet capital adequacy norms at the end of second quarter. IDBI Bank shares had dropped sharply by over 5 per cent to a day’s low of Rs 57.85 after the announcement. The stock, however, recovered in the last hour of trade.
Stake acquisition on hold till Aug 30
New Delhi: The Life Insurance Corporation (LIC) of India told the Delhi High Court Tuesday that it will not take any steps till August 30 towards its proposed acquisition of 51 per cent stake in the Industrial Development Bank of India (IDBI). The oral assurance by the LIC was given before Justice Vibhu Bakhru as he appeared inclined to pass orders restraining the state-run insurance company from making any investment in the IDBI in which the government intends to dilute its shareholding below 51 per cent. “You (LIC) will not present us with a fait accompli,” the court said after which Additional Solicitor General Maninder Acharya, appearing for the Centre and the LIC, urged that no order be passed and the matter be listed for hearing on August 30 as till then nothing will happen. The ASG also sought time to file an affidavit indicating the reasons behind the government and LIC’s decision. The court gave LIC time till August 30 to file the affidavit in which the insurance company was asked to also indicate its Board’s minutes of meeting and agenda papers pertaining to the proposed investment in the IDBI.