KS Partners advises IDBI in the proposed conversion of the loan of Rs523 crore in the form of OCDs extended by GOI to IFCI SEBI exempts GOI from making open offer

Khaitan Sud & Partners advised IDBI Capital Market Services, the financial advisor appointed by the Government of India (GOI) for providing assistance and advice relating to the proposed conversion of loan of Rs. 523 crore (in the form of optionally convertible debentures) (OCDs) extended by GOI to IFCI Limited..KS Partners team was led by Partner Tanuj Sud along with Principal Associates Deepak Khurana and Sujeet Das and Associate Archit Virmani..One of the key factors relating to effectuation of the proposed conversion of OCDs, was grant of exemption from complying with the open offer requirements stipulated under regulations 3(1), 3(2) and 4 of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (the “Takeover Regulations”) in respect of the proposed increase in shareholding from 0.0000011% to 55.57% in IFCI pursuant to conversion of OCDs..Based on an application submitted by GOI under Regulation 11(3) of the Takeover Regulations, Securities and Exchange Board of India (SEBI) vide order dated September 24, 2012, granted exemption in connection with the proposed conversion subject to the following conditions:.The exemption is limited to the requirements of making open offer under regulation 3(1), (2) and 4 of the Takeover Regulations, and shall not extend to other obligations of GOI and IFCI under any other law (e.g. disclosure requirements under Chapter V of the Takeover Regulations, the Listing Agreement, etc.);The proposed acquisition shall be in accordance with the relevant provisions of the Companies Act, 1956 and other applicable laws; and The GoI/IFCI shall ensure compliance with the statements, disclosures and undertakings made in the application and subsequent correspondence in the matter..According to KS Partners press release, the exemption granted by SEBI is one of the first such exemptions granted by SEBI under the Takeover Regulations and was based on several factors such as the proposed conversion resulting in IFCI becoming a government company so as to increase public accountability.