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The Securities and Exchange Board of India (Sebi) has exempted six Muthoot family trusts from making an open offer for the indirect acquisition of shares in Muthoot Microfin as part of an internal family restructuring. The move follows changes to the transaction structure after Muthoot Fincorp approved its proposed IPO and revised the shareholding arrangement to comply with promoter contribution norms. Sebi said the restructuring is meant for succession planning and will not change the control or management of Muthoot Microfin or affect the interests of public shareholders. The exemption will remain valid for one year, subject to specified conditions.
The Securities and Exchange Board of India (Sebi) has granted an exemption to six Muthoot family trusts from making an open offer for the proposed indirect acquisition of shares in Muthoot Microfin Ltd as part of an internal family restructuring.
The exemption has been granted to Thomas John Muthoot (MF) Trust, Thomas George Muthoot (MF) Trust, Thomas Muthoot (MF) Trust, Preethi John Muthoot (MF) Trust, Nina George (MF) Trust and Remmy Thomas (MF) Trust under the provisions of the Sebi (Substantial Acquisition of Shares and Takeovers) Regulations, 2011.
According to Sebi's order issued in the past week, the restructuring will be carried out through multiple transfers of shares to the six trusts. The process will also include the conversion of compulsorily convertible preference shares (CCPS) into equity shares and transfers of shares by the spouses of the promoter family members.
After completion of the restructuring, the six trusts will together hold a 63.35 per cent stake and control in Muthoot Fincorp Ltd (MFL). Muthoot Fincorp currently owns a 50.21 per cent stake in Muthoot Microfin Ltd (MML), making the transaction an indirect acquisition under the takeover regulations.
Under Sebi's takeover rules, such an indirect acquisition would normally require the acquirers to make an open offer to public shareholders. However, the regulator concluded that the restructuring is part of an internal family succession plan and does not involve any change in the control or management of Muthoot Microfin. Sebi also noted that the transaction is not expected to adversely affect the interests of public shareholders.
The regulator had granted a similar exemption for an earlier version of the restructuring proposal earlier this year. However, after Muthoot Fincorp's board approved its proposed initial public offering (IPO), the family revised the transaction structure to comply with the minimum promoters' contribution (MPC) requirements under Sebi's Issue of Capital and Disclosure Requirements (ICDR) Regulations.
The proposed conversion of CCPS further altered the shareholding structure, requiring the six trusts to submit a fresh application seeking exemption from the open offer obligation.
As part of the revised arrangement, Thomas John Muthoot, Thomas George Muthoot and Thomas Muthoot will continue to hold the remaining 28.23 per cent stake in Muthoot Fincorp. This has been structured to ensure compliance with the minimum promoters' contribution requirement for the company's proposed IPO.
In its order, Sebi said it had exempted the six proposed acquirers from complying with the open offer requirements under the takeover regulations for the proposed indirect acquisition of Muthoot Microfin through the restructuring exercise.
The regulator has attached certain conditions to the exemption. The trusts will be required to file a report within 21 days after completing the acquisition. Sebi also clarified that the relief is restricted only to the open offer requirement and does not exempt the entities from complying with any other applicable laws or regulatory provisions.
The exemption will remain valid for one year from the date of Sebi's order. If the proposed acquisition is not completed within this period, the exemption will automatically lapse.
Source PTI
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