LIC, Centre to sell 60.7% stake in IDBI Bank

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Ziraat Times
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New Delhi, Oct 7: The Union finance ministry has announced to sell 60.7 per cent of government’s and LIC’s joint stake in IDBI Bank.

According to the expression of interest (EoI) released by the Department of Investment and Public Asset Management (DIPAM), LIC, which owns 49.2 per cent in IDBI, will cut its stake to 19 per cent, while the government will reduce its shareholding to 15 per cent from 45.5 per cent at present.

When the markets closed on Friday, IDBI Bank’s market cap was nearly Rs 45,913 crore.

Even without a premium, LIC stands to garner Rs 13,844 crore, while the Centre can rake in Rs 13,994 crore from a successful stake sale. So far, the Centre has rung up Rs 24,543.67 crore as disinvestment receipts against the FY23 target of Rs 65,000 crore.

According to the EoI, the entities eligible to bid for IDBI Bank include private-sector banks, foreign banks, non-banking financial companies (NBFCs), alternative investment funds (AIFs) registered with the Securities and Exchange Board of India, or any other fund incorporated outside India. The bidder may submit its EoI solely on its own or as part of a consortium.

The successful bidder will have to bring down the equity to 26 per cent in 15 years, and in the first five years from the date of acquisition 40 per cent of the equity capital will remain locked in, according to central bank guidelines.

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The interested parties should have a minimum net worth of Rs 22,500 crore ($2.85 billion) and reported profits in at least three of the last five financial years. If the successful bidder intends to amalgamate IDBI Bank with itself or if it is required by the Reserve Bank of India, the EoI says the Centre and LIC will vote in favour of such a step at meetings of the board or the shareholders of IDBI Bank.

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