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Sep 26, 2012, 01.40 PM IST
Market regulator Sebi has approved a proposed hike of the government's stake in IFCI Ltd to 55.57 percent to make it a state-run company, without triggering an open offer for shares of public investors.
The Union Cabinet last month approved a proposal for conversion of debentures worth Rs 923 crore into shares of IFCI (Industrial Finance Corporation of India Ltd), following which the government's stake in the financial institution would rise to 55.57 percent, from a meagre 0.0000011 percent currently.
Subsequently, the Finance Ministry wrote to Sebi (Securities and Exchange Board of India) on August 29, seeking an exemption from the requirement of making an open offer.
IFCI is into funding of industrial projects. It has no promoters but major shareholder is LIC.
As per Sebi's takeover norms, any stake purchase of 25 percent or more requires the acquirer to make an open offer for a further 26 percent stake from the public shareholders.
Sebi added that IFCI was made a public limited company with a view to make it a government company and a substantial amount of public funds have been infused into it.
Sebi's Whole-Time Member Rajeev Kumar Agarwal said that conversion of such debts into equity would provide "more accountability and would stand as an additional safeguard to the investment of such public funds.
"These observations also address the issues raised by the Target Company (IFCI) with respect to the interests of the investors...," he said.
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