The government will get financial bids for the strategic sale of IDBI Bank by December and the successful bidder will be announced by March, department of investment and public asset management (DIPAM) secretary Arunish Chawla said on Friday.
The due diligence process and data protocols have been completed by the interested parties (QIPs).
“Formal consultations have been completed with the QIPs. We hope to invite financial bids in Q3,” Chawla said.
Shares of IDBI Bank closed at Rs 90.17 on Friday, down 2.68% from previous close on the BSE.
Stake sale details and next steps
The DIPAM received multiple expressions of interest (EOI) on January 7, 2023 for a total of 60.72% stake in the bank, including 30.48% (around Rs 29,551 crore at current prices) from the government and 30.24% from promoter LIC, along with the transfer of management control in the bank.
After the financial bids are received, regulatory approval, including from the Reserve Bank of India, Securities and Exchange Board of India and Competition Commission of India, will be sought before issuing a letter of award.
While all the processes will be over by March 2026, the actual payment to the government and LIC for their stakes will happen by that time or not, can’t be ascertained now, as the bidder has to arrange funds, etc.
Buyer’s autonomy and employee safeguards
To make the sale smooth, the government is understood to have given assurance that the potential buyer would have a free hand in the running of the bank, such as a change in management, etc. According to the Banking Regulation Act, 1949, the voting rights of a shareholder or shareholders acting in concert in a bank can’t exceed 26%, even if they own more than 26%.
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.
This will be the largest deal in the BFSI field so far in the country, and overall, this will be the second largest after the Flipkart-Walmart deal.