IDBI Bank shares zoom 15% as Cabinet gives in-principle nod to divestment

Shares of IDBI Bank surged 15 per cent to Rs 43.50 on the BSE in the intra-day trade on Thursday after the Cabinet Committee on Economic Affairs gave its in-principle approval for strategic disinvestment along with transfer of management control in IDBI Bank.

At 09:21 am, the stock was trading 9 per cent higher at Rs 41.35 on the BSE on the back of heavy volumes. Around 2.7 million equity shares had changed hands on the BSE in the first few minutes of trade, as compared to an average 1.74 million shares traded in the past two weeks. In comparison, the S&P BSE Sensex was up 0.10 per cent at 48,728 points.

The Cabinet Committee on Economic Affairs, on Wednesday, approved the strategic divestment of IDBI Bank, along with a transfer of management control. The extent of respective shareholding to be divested by government and Life Insurance Corporation (LIC), howver, will be decided at the time of structuring of transaction in consultation with Reserve Bank of India (RBI).

"Department of Investment and Public Asset Management (DIPAM), Ministry of Finance, Govt. of India (GoI) vide their email dated May 05, 2021 has informed that Cabinet Committee on Economic Affairs has given its in-principle approval for strategic disinvestment along with transfer of management control in IDBI Bank," the Bank said in exchange filing.

LIC's Board has also passed a resolution to the effect that LIC may reduce its shareholding in IDBI Bank through divesting its stake along with strategic stake sale envisaged by the Government with intent to relinquish management control and by taking into consideration price, market outlook, statutory stipulation and interest of policy holders. This decision of LIC's Board is also consistent with the regulatory mandate to it to reduce its stake in the Bank.

The government and LIC together own 94.72 per cent of equity of IDBI Bank (GoI 45.48 per cent, LIC 49.24 per cent). LIC is currently the promoter of IDBI Bank with management control and the government is the co-promoter, the Bank said.