IDBI Bank’s shares rose almost 15 per cent in Thursday’s trading vis-a-vis the previous close as the Government decided on a strategic disinvestment of its stake and transfer of management control in the Bank.
In intraday trading so far, the bank’s shares touched a high ₹43.50 apiece and a low of ₹40.15. The shares closed at ₹37.95 on Wednesday.
IDBI Bank: Divestment, transfer of management control approved
The bank, in a regulatory filing on Wednesday, said the Department of Investment and Public Asset Management (DIPAM) has informed that the Cabinet Committee on Economic Affairs has given its in-principle approval for strategic disinvestment of Government of India’s (GoI) stake, along with transfer of management control in IDBI Bank Ltd.
LIC Board passes resolution
The Board of Life Insurance Corporation of India (LIC) has also passed a resolution to the effect that the insurer may reduce its shareholding in IDBI Bank through divesting its stake, along with strategic stake sale envisaged by the Government with an intent to relinquish management control, and by taking into consideration price, market outlook, statutory stipulation and interest of policy holders.
IDBI Bank posts first full-year profits in 5 years at ₹1,359 cr in FY21
“This decision of LIC’s Board is also consistent with the regulatory mandate to it to reduce its stake in the bank,” the filing said.
The extent of respective shareholding to be divested by GoI and LIC will be decided at the time of structuring of transaction in consultation with the Reserve Bank of India.
GoI and LIC together own 94.72 per cent of equity of IDBI Bank (GoI: 45.48 per cent and LIC: 49.24 per cent). LIC is currently the promoter of IDBI Bank with Management Control and GoI is the co-promoter.
The bank’s shares were trading at ₹40.65 apiece, up 7.11 per cent over the previous close, at 11.15 am.