IDBI Bank vaults as Govt invite bids for privatisation

IDBI Bank spurted 9.02% to Rs 46.55 after the government invited bids for privatising the bank.

The Government of India (Gol) has kicked off the process for strategic disinvestment of IDBI Bank with the transfer of management control. The government has issued a preliminary information memorandum to invite expressions of interest from prospective buyers.

Gol, acting through Department of Investment and Public Asset Management (DIPAM), has engaged KPMG India as the legal advisors for providing advisory services and managing the transaction.

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

Currently, GoI holds 45.48% and LIC holds 49.24% of the total equity share capital of IDBI Bank.

The divestment process has been divided into two sequential stages. The successful bidder, whether a sole entity or a consortium, is required to hold and lock-in at least 40% of the paid up and voting equity share capital of IDBI Bank, at all times, for a period of 5 years from the date of acquisition of stake in IDBI Bank.

The selection of the qualified interested parties and the amount of equity stake such entities would hold in IDBI Bank would be decided by the Reserve Bank of India and the bidder would have to clear the 'Fit and Proper' assessment done by the banking regulator.

Large industrial/corporate houses will not be permitted to participate in this bidding process for the transaction, either on its own or as a part of a consortium.

The last date for submission of bids or Expression of Interest (EoI) by potential buyers is 16 December 2022.

IDBI Bank is one of India's one of the state own largest bank having more than 1,890 branches with 3,300 ATM's across the globe.

IDBI Bank reported 25% jump in net profit to Rs 756 crore despite a 13% fall in total income to Rs 5,781 crore in Q1 FY23 over Q1 FY22.

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