GIC, PSU insurers axed from UTI Bank offer

The General Insurance Corporation (GIC), the country's only reinsurer, and the four government-owned general insurance companies, New India Assurance, Oriental Insurance, United India Insurance and National Insurance, will not be able to participate in the upcoming preferential offer being made by UTI Bank to its promoter shareholders.

A UTI Bank official said these companies had sold some shares of the bank after the extraordinary general meeting on June 25, which passed a resolution to make a preferential offer to its promoter shareholders.

Guidelines framed by the Securities & Exchange Board of India say that any shareholder that has sold shares six months prior to the date of a preferential offer cannot participate in the offer.

“Accordingly, they have been declared ineligible to subscribe to the preferential offer. However, they could approach Sebi to get an exemption,” said a senior UTI Bank official.

Confirming the development, the investment head of a public sector insurance company said, “We are not eligible for the preferential offer.”

Asked why his company had sold the UTI Bank shares, the official said, “The market was moving up. It was part of our regular transactions. We have to book capital gains.”

The GIC and the four insurance companies together hold 5 per cent in UTI Bank.

The bank was planning to mobilise over Rs 2,000 crore through the preferential allotment to its promoters — the Specified Undertaking of Unit Trust of India, the Life Insurance Corporation, the GIC and the four general insurers.

If GIC and the four insurance companies do not participate in the preferential offer, their stake in UTI Bank could come down from the current 5 per cent.

Source:Business Standard