Govt & LIC’s IDBI Bank sale to 2nd stage, receives multiple EOIs

IDBI Bank Share

The govt and LIC’s sale of their strategic stake in IDBI Bank will proceed to the 2nd stage. Multiple expressions of interest have been received, according to the DIPAM Secretary. Both the government and LIC aim to divest a combined 60.72% stake in the Mumbai-based bank.

The Department of Investment and Public Asset Management (DIPAM) has received multiple expressions of interest for the strategic disinvestment of the government and Life Insurance Corporation of India (LIC) stake in IDBI Bank, according to a tweet from DIPAM Secretary Tuhin Kanta Pandey.

The transaction will now move to the second stage, according to the secretary.

The Department of Investment and Public Asset Management (DIPAM) invited expression of interest (EOI) for the strategic disinvestment of a stake totaling 60.72% in IDBI Bank by the Indian government and the Life Insurance Corporation of India (LIC), along with the transfer of management control. The deadline for submitting EOIs was revised to January 7, 2023, from the earlier date of December 16, 2022. The deadline for submitting physical copies of EOIs has also been revised to January 14th.

It is worth noting that, earlier this week, the Securities and Exchange Board of India (Sebi), the market regulator, allowed the government to reclassify its shareholding in IDBI Bank as ‘public’ in order to enable new investors to meet the minimum public shareholding requirement, ahead of the deadline for submitting expression of interest (EOI).

Additionally, on Monday, the Finance Ministry announced that an exemption would be given to the new buyer of the bank, which will allow them to maintain a minimum public shareholding of 25% in IDBI Bank during the open offer.

On Friday, IDBI Bank shares closed at ₹59.05 each, representing a 7.85% increase on the Bombay Stock Exchange (BSE). The bank’s market capitalization is approximately ₹63,492.93 crore.

The Indian government has indicated that “there may not be any impact on the primary dealer business of IDBI Bank.

As part of the strategic disinvestment, the Indian government plans to sell a 30.48% stake in IDBI Bank, while the Life Insurance Corporation of India (LIC), the largest insurer in the country, plans to sell a 30.24% shareholding, for a total stake sale of 60.72%.

As of March 31, 2022, LIC was the largest shareholder in IDBI Bank, holding 529.41 crore equity shares, or 49.24%. The Indian government held 488.99 crore equity shares, or 45.48% of the bank.

The divestment process is divided into two stages. In the first stage, expressions of interest (EOIs) are invited, and after a ‘Fit and Proper’ assessment by the Reserve Bank of India (RBI) and security clearance by the Government of India/Ministry of Home Affairs, the selected bidders will be notified as qualified interested parties (QIPs). The second stage involves QIPs being provided with a request for proposal document (RFP) and additional information about IDBI Bank, and submitting financial bids based on the terms detailed in the RFP.

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