Capital markets regulator Sebi on Monday exempted six Muthoot family trusts from making an open offer for the proposed indirect acquisition of shares in Muthoot Microfin as part of an internal restructuring. According to the order, the restructuring will be implemented through multiple transfers of shares to the six trusts, including after the conversion of compulsorily convertible preference shares (CCPS) and transfers by the spouses of the promoters. The exemption is valid for one year and subject to reporting conditions. As per The Hindu BusinessLine, Sebi said in the order: "I... grant exemption to the proposed acquirers, viz., 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, from complying with the requirements of... of the SAST Regulations, 2011 with respect to the proposed indirect acquisition in the target company, viz., Muthoot Microfin Ltd, by way of proposed transactions." However, Muthoot Fincorp's board approved its proposed initial public offering (IPO) on May 16 this year, requiring changes to the transaction structure to comply with the minimum promoters' contribution (MPC) norms under the Issue of Capital and Disclosure Requirements regulations.
Upon completion of the transaction, the trusts will collectively hold a 63.35 per cent stake and control in Muthoot Fincorp Ltd (MFL), which in turn holds a 50.21 per cent shareholding in Muthoot Microfin Ltd (MML). The six promoter family trusts exempted are: Thomas John Muthoot (MF) Trust, Thomas George Muthoot (MF) Trust, Thomas Muthoot (MF) Trust, Preethi John Muthoot (MF) Trust, Nina George Muthoot (MF) Trust and Remmy Thomas (MF) Trust. Thomas John Muthoot, Thomas George Muthoot, and Thomas Muthoot will retain the remaining 28.23 per cent stake in Muthoot Fincorp to meet the minimum promoters' contribution (MPC) requirement for the IPO. According to the order, the regulator observed that the restructuring is part of an internal family reorganisation for succession planning and would not result in any change in the control or management of Muthoot Microfin or prejudice public shareholders. The regulator also noted that the proposed acquirers must complete the acquisition within the specified timeframe, failing which the exemption will lapse.
The proposed transaction would have otherwise triggered an open offer requirement under the takeover regulations. As reported by The Hindu BusinessLine, Sebi said the exemption is subject to conditions, including the filing of a report within 21 days from the date of acquisition. The regulator also clarified that the exemption is limited to open offer requirements and does not waive other compliance obligations under applicable regulations. The proposed conversion of CCPS also altered the structure, prompting the trusts to file a fresh exemption application. The regulator noted that the exemption from open offer obligations is valid for one year from the date of the order, within which the proposed acquirers must complete the acquisition; failing which, it will lapse and cease to exist. According to SEBI, the revised restructuring has been designed to align the promoter holding structure with the proposed initial public offering (IPO) of Muthoot Fincorp.
The transaction represents an internal family succession exercise that will be carried out through gift transfers among members of the promoter family, as noted by SEBI. The regulator observed that the ultimate beneficial ownership of the business will continue to remain with the existing promoter family, ensuring continuity in ownership and management. The revised structure ensures that promoter shareholding and public shareholding in Muthoot Microfin will remain unchanged following the transaction. SEBI concluded that the interests of public shareholders in Muthoot Microfin would remain unaffected, as there would be no change in control, promoter ownership or the company's public shareholding pattern. The exemption removes a key regulatory hurdle for the promoter restructuring ahead of Muthoot Fincorp's proposed IPO while preserving the existing ownership and governance framework of Muthoot Microfin.
