The financial bids for strategic sale of IDBI Bank are expected in the fourth quarter of the current financial year, sources said, adding that the disinvestment process is moving phase-wise and is on track.
After the Reserve Bank of India issued the ‘fit and proper’ certificate to the shortlisted bidders in July, the transaction adviser KPMG is currently advancing the process by providing them access to the banks’ data room for assessment and clarifying doubts.
The government had received multiple expressions of interest (EOI) on January 7, 2023 for a total of 60.72% stake in the bank, including 30.48% (approx. Rs 26,756 crore at current prices) from the government and 30.24% from promoter LIC, along with the transfer of management control. The bidders include Fairfax India Holdings (promoter of CSB Bank), Emirates NBD, and Kotak Mahindra Bank, according to reports.
The next phase is to finalise the draft Share Purchase Agreement (SPA) in consultation with the bidders, a senior official said.
The bidders would go through the draft SPA in which the government and promoter LIC would work towards satisfying a set of conditions including various regulatory approvals.
“Given the processes involved, the financial bids are unlikely in calendar 2024. It is expected in the fourth quarter of the current financial year,” the official said, adding that the effort is to conclude the transaction in FY25.
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, sources said.
This will be the first strategic disinvestment of a bank with a significant government holding, an erstwhile public sector bank.
Following improvement in asset quality, the IDBI Bank exited the prompt corrective action (PCA) framework of the RBI in March 2021. After a gap of five years, it was back in the black with a net profit of Rs 1,359 crore for FY21. It posted a net profit of Rs 2,439 crore in FY22, Rs 3,645 crore in FY23 and Rs 5.634 crore in FY24.