The division of investment and public asset management (DIPAM) in the finance ministry on Tuesday floated a Request For Proposal (RFP), inviting transaction and legal advisers for strategic disinvestment of IDBI Bank. Once these advisers are appointed, the division would promptly invite expressions of interest (EoIs) for buy of the stakes on offer you and this would most likely be by September, a senior official told FE. According to the RFQ, the applications can be filed till July 13.
Once these advisers are appointed, the division will promptly invite expressions of interest (EoIs) for buy of the stakes on offer you and this would most likely be by September, the official added.
As per the strategy, the government will exit the bank by divesting its complete 45.48% stake worth about Rs 19,000 crore at the present industry rates and promoter Life Insurance Corporation will offer you to sell a portion of its 49.24% stake with an intent to relinquish management handle.
After a failed try a handful of years ago, the government diluted its stake in IDBI Bank in January 2019 in favour of LIC, which then became the promoter in the bank with 51% stake. Under a specific dispensation, the Insurance Regulatory and Development Authority has permitted LIC to hold 51%, against the norm of 15%. The insurer will, having said that, have to pare its stake to 15% in due course.
Absence of meaningful investor interest resulted in the government in the end possessing to sell its majority stake in IDBI Bank to LIC. That was barely privatisation. “However, this could change in 2021 if both government and LIC are able to divest a majority stake in the bank to an external investor, as it may be indicative of broader investor appetite in state-owned banks with adequate loan-loss reserves,” Fitch Ratings mentioned in a note on June 7.
After a gap of 5 years, IDBI Bank was back in the black with a net profit of Rs 1,359 crore for FY21. Following improvement in asset excellent, the bank exited the prompt corrective action (PCA) framework on March 10. It can resume corporate lending which was stopped immediately after it came beneath PCA.
The improvement in the wellness of the bank is also reflected in its share price tag. IDBI Bank share price tag has risen 46% to Rs 38.60 as on Tuesday on the BSE, compared with Rs 26.35 on January 27.
Of the Rs 1.75-lakh-crore disinvestment target for FY22, the government has budgeted Rs 1 lakh crore from disinvestment of government stake in public sector monetary institutions and banks such as LIC (IPO) and IDBI Bank strategic sale.