Government kicks off IDBI Bank strategic disinvestment

The transaction will entail the sale of the government’s own 45.48% stake in the bank as well as that of LIC

October 07, 2022 04:50 pm | Updated 09:10 pm IST - New Delhi

A view of a IDBI Bank. Photo used for representation purpose only.

A view of a IDBI Bank. Photo used for representation purpose only. | Photo Credit: G. Ramakrishna

The government on October 7, 2022, kicked off the process for strategic disinvestment of IDBI Bank with the transfer of management control, by issuing a preliminary information memorandum to invite expressions of interest from prospective buyers.

The Government of India will sell 30.48% of its stake in the bank, and Life Insurance Corporation of India (LIC) shall sell 30.24%, aggregating to 60.72% of IDBI Bank’s share capital, along with transfer of management control in the lender.

LIC, the bank’s current promoter, holds 49.24% stake, while the government’s stake in the bank comes to 45.48%. Public shareholders hold 5.28%.

Strategic investors interested in taking over the bank have been given time till October 28 to submit any queries they have on the preliminary information memorandum issued on Friday and submit expressions of interest by December 16 this year.

Interested parties will only be considered as qualified bidders if they meet the eligibility criteria laid down for the deal, and subsequently secure a clearance as a ‘Fit & Proper’ entity by the Reserve Bank of India and a Security Clearance from the Government of India/Ministry of Home Affairs.

Only qualified bidders will be given the RFP (Request for Proposal) document in the second stage of the transaction, as per the memo published by the Department of Investment and Public Asset Management (DIPAM) in the Finance Ministry. At this stage, they will be provided further details of the Bank’s operations and will be able to place financial bids.

Those allowed to bid for the bank include private and foreign banks, RBI-regulated NBFCs, entities registered with SEBI as an AIF as well as investment vehicles incorporated outside India. A minimum net worth of ₹22,500 crore has been set for firms looking to bid individually or through a consortium, which can include a maximum of four entities with a lead member holding at least 40% stake.

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