IDBI Bank potential bidders likely to get data room access next week

This will allow interested bidders to obtain detailed financial information about the bank to carry out due diligence

The finance ministry (FinMin) is likely to provide private data room access to potential bidders of IDBI Bank as soon as next week after it received a fit and proper nod for three suitors from the Reserve Bank of India (RBI), senior government official told Business Standard. Such access will allow interested bidders to obtain detailed financial information about the bank to carry out due diligence.

Last week, Department of Investment and Public Asset Management (DIPAM) secretary Tuhin Kanta Pandey had told this newspaper that financial bids for IDBI Bank could be called before the end of the current financial year.

“Further, much will depend on how potential bidders would look at it. We should have the bids before the end of this financial year,” Pandey had said.

In the FY17 Union Budget, the government had announced its intention to reduce its stake in IDBI Bank to below 50 per cent, and put out the preliminary information memorandum for inviting expression of interest (EoI) in October 2022. The strategic stake sale is seen as a test case for the government’s public sector enterprise policy to cut down the government’s presence in business.

The government and the Life Insurance Corporation (LIC) plan to sell a 60.72 per cent stake in IDBI Bank. As of December 31, 2023, LIC held 49.24 per cent of IDBI Bank, while the government owned 45.48 per cent, and the remaining 5.28 per cent was with the public.

DIPAM, the nodal department responsible for disinvestment, had received multiple interests for the proposed stake sale and transfer of management control in the IDBI Bank.

The government had forwarded bidders’ details to the RBI in January 2023. “One of the reasons for taking a longer time is the involvement of multiple players — private equity firms, NBFCs (non-banking financial companies) and a consortium — and not just banks (who are in the fray). In that case, the conditionalities are also detailed,” the senior government official conceded.

The government received the EoI from multiple bidders on January 2, 2023. The bidders will also review the draft share-purchase agreement (SPA), which outlines a series of precedent-defining requirements, including regulatory approvals that the government and promoter LIC would need to fulfil.