The due diligence by qualified bidders for acquiring a majority stake in IDBI Bank is currently underway, minister of state for finance Pankaj Chaudhary said on Monday.
The government had received multiple expressions of interest on January 7, 2023 for 60.72% stake in the bank, including 30.48% (approximately Rs 25,200 crore at current prices) from the government and 30.24% from promoter LIC, along with the transfer of management control in the bank. The bidders include Fairfax India Holdings (promoter of CSB Bank), Emirates NBD, and Kotak Mahindra Bank, according to reports. “After security clearance by the ministry of home affairs (MHA) and fit and proper evaluation by the Reserve Bank of India (RBI), the due diligence by the qualified bidders is being done,” Chaudhary said in a written reply in the Lok Sabha.
On whether the government plans to discuss the implications of the proposed privatisation with IDBI employees, Chaudhary said that while deciding the terms and conditions of the strategic sale, legitimate concerns of the existing employees and other stakeholders are suitably addressed through appropriate provisions made in the share purchase agreement.
The bidders would have access to the banks’ data room for assessment and clarifying doubts. The bidders would also go through the draft SPA in which the government and promoter LIC would work towards satisfying a set of conditions including various regulatory approvals.
In the event of a bank winning the bid to acquire IDBI Bank, the promoters would be given reasonable time to merge both entities to comply with the RBI’s norms that a promoter/promoters could have one bank license only. The regulatory processes would take some time. The transaction is expected to be concluded in the next financial year.
This will be the first strategic disinvestment of a bank with a significant government holding, an erstwhile public sector bank.