GE Capital, which is acquiring the Delhi-based SRF Finance, has told the Securities and Exchange Board of India (Sebi) it will make a public announcement about an offer for the company under the new takeover regulations. However, it has not specified what percentage it seeks to acquire.
GE Caps had earlier told Sebi it would make an offer for acquiring 100 per cent of the shares, but has not clarified whether it will acquire less now that the finance ministry has raised certain points on the 100 per cent offer. Sebi, on its part, has not stipulated any upper limit that GE Caps can bid for, since this is a policy issue with the Foreign Investment Promotion Board (FIPB).
According to highly placed Sebi sources, GE Caps communicated to Sebi that it will make a public announcement under the new code. This means it will now be necessary for GE Caps to conform to the requirement of opening an escrow account and depositing a percentage of the total offer as escrow deposit. Sebi has not been told about whether the offer will now be for less than 100 per cent, following the finance ministry's intervention.
Sebi sources said GE Caps had earlier sought to make a 20 per cent public offer, but later decided to raise it to 100 per cent.
The company then consulted Sebi and was told that the offer would have to be made according to the new Sebi takeover regulations, notified recently.
Sebi officials said while they had no indications from GE Caps that they would prune the offer from 100 per cent to about 85 per cent, it was possible under the new code to make an offer for an outer limit of 85 per cent of the company's stake.
The shares which come in after this level can be acquired pro-rata, as is the usual practice, the officials said.
"We are interested only in the takeover aspect. The FIPB issue of 100 per cent stake is not Sebi's concern," a Sebi official explained.
The GE Caps takeover of SRF Finance has become an important issue of late, after the US major decided it wanted to acquire 100 per cent of the company. Thereafter, the finance ministry is reported to have expressed some reservations in allowing a 100 per cent takeover, since it was in the financial sector.
GE Caps has signed a memorandum of understanding with the Arun Bharat Ram-controlled SRF to pick up 55.5 per cent in SRF Finance, at Rs 53.50 per share. The US company is now reported to have agreed to keep its total stake at 85 per cent, and not 100 per cent as it had decided earlier.
