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Business EconomyPosted at: Apr 3 2025 8:12PM


SEBI exempts Govt from making an open offer in Vodafone Idea Ltd

New Delhi, Apr 3 (UNI) Stock market regulator SEBI on Thursday exempted the Government of India from making an open offer in telecom company Vodafone Idea (Vi) following acquisition of about 34 per cent equity on the conversion of spectrum dues of TSP into government equity.
An open offer may result in the acquisition of further equity shares of Vi by the Government which will result in cash outflow by the Government and may also result in GoI’s shareholding in the TSP potentially exceeding fifty percent (50%) and consequently, may entail acquisition of "control" in respect of Vi, which is not the intent of the GoI with respect to this conversion, Securities and Exchange Board of India (SEBI) said in the order.
An application was made earlier this week seeking exemption from the applicability of Regulation 3(1) of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 in the matter of proposed direct acquisition of shares in Vi was received by SEBI from Department of Investment and Public Asset Management (DIPAM), Ministry of Finance.
Having failed to pay up dues, the Government had asked private telecom company Vi to issue shares worth Rs 36,950 crore which will result in government’s stake going up to 48.99 per cent from 22.60 per cent now.
The promoters of Vi will, however, continue to have operational control on day-to-day operations of the telecom firm, the Department of Telecom (DoT) had said.
The total amount to be converted into equity shares is Rs 36,950 Crore. The Company has been directed to issue 3,695 Crore equity shares of the face value of Rs. 10/- each at an issue price of Rs. 10/- each within a period of 30 days after issuance of necessary order from relevant authorities including from Securities and Exchange Board of India, Vi had said in a regulatory filing with the stock exchanges.
The pricing of shares to be allotted has been arrived basis the higher of the volume weighted price of equity shares during last 90 trading days preceding the Relevant Date or 10 days preceding the Relevant Date (the Relevant Date being 26 February 2025), subject to provision of section 53 of the Companies Act, 2013 (i.e. shares cannot be issued at less than the par value).
Post the aforesaid issuance of equity shares, the Government of India shareholding in the Company will increase from existing 22.60 per cent to approx. 48.99 per cent. The promoters will continue to have operational control of the company.
The proposed acquisition by the Government in the instant case is intended to provide relief, in public interest, by easing liquidity and cash flow to the TSP, the SEBI order said adding GoI has permitted TSPs to pay the due instalments by way of equity, before/after expiry of the moratorium/deferment period, consequent to a review of the prevailing situation, at the option of the GoI, as communicated by the DoT vide its Letter dated March 28, 2025.
“In view of the special circumstances of this matter, public policy and public interest involved in the entire transaction and taking into cognizance various steps taken by GoI to ease liquidity and cash flow to the TSPs as well as to help various banks having substantial exposure to the Telecom sector, I note that the proposed acquisition of shares by GoI merits consideration. Considering the fact that a substantial sum of money is due to be paid to the GoI by Vi, which may place a potential burden on the financials of Vi, and also that an open offer obligation on the part of GoI involves huge sums of cash outflow (from GoI), I find that it would be appropriate to grant exemption to the Acquirer (GoI) from open offer requirements as laid down in Regulation3(1) of the Takeover Regulations, 2011,” Ashwani Bhatia, Wholetime Director, SEBI, said in the order.
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