PremiumThe Central Government has received interest from both domestic and foreign investors to acquire a majority stake in IDBI Bank in the first such transaction in the banking sector.
The government aims to complete the disinvestment process in IDBI Bank within the first half of next financial year, said DIPAM secretary Tuhin Kanta Pandey. “We hope to conclude IDBI Bank sale by first half of the next financial year," Pandey said.
On Saturday, the government said it has received multiple preliminary bids for strategic sale of about 61% stake in IDBI Bank.
"Multiple Expressions of Interest received for the Strategic Disinvestment of Govt and LIC Stake in IDBI Bank," the DIPAM Secretary had tweeted.
The transaction will now move to the second stage in which the potential bidders will conduct due diligence before putting financial bids.
The federal government owns 45.48% of IDBI Bank, and is looking to divest a 30.48% stake in the lender, alongside state-owned Life Insurance Corp of India (LIC), which will sell a 30.24% from its holding of 49.24% in the bank.
The bidders will be vetted for the Reserve Bank of India’s "fit and proper criteria" and then the confidential data of the lender will be shared with potential bidders, Pandey said.
However, the names of the bidders are yet to be disclosed.
The divestment department, managing privatisation of state-owned firms and overseeing stake sales in companies, has so far mopped up ₹31,110 crore out of its ₹65,000 target for 2022-23.
“The government will explore whatever opportunity (offer for sale) if market conditions remain favourable," Pandey said.
Earlier, DIPAM had said that the potential buyers should have a minimum net worth of ₹22,500 crore and must report a net profit in three out of the last five years to qualify to bid for the bank.
In addition, a maximum of four members would be permitted in a consortium. Also, the successful bidder would be required to mandatorily lock in at least 40 per cent of the equity capital for five years from the date of acquisition.
The federal government is planning to sell a part of its stake in Hindustan Zinc in the current financial year, Pandey further said. India owns 29.5% stake in Hindustan Zinc.
Shares of IDBI Bank on Monday closed at ₹58.80, down 0.42% over previous close on the BSE.
With agency inputs