Kotak Mahindra Bank is said to have concluded its due diligence process to acquire the government’s stake in IDBI Bank, sources close to the development told FE.
The due diligence process involves reviewing confidential information such as borrower data, exposure, and loan provisions to assess the bank’s financial health.
With the Uday Kotak-promoted lender’s entry, the battle to take over IDBI Bank becomes more interesting, as two global players — Oaktree Capital Management and Fairfax Financial — have already completed their due diligence of the bank.
According to sources, Emirates NBD may no longer be in the race after its recent acquisition of RBL Bank. Fairfax Financial already owns a 40% stake in CSB Bank.
When contacted over email with queries on due diligence and its formal interest in acquiring IDBI Bank, a Kotak spokesperson responded: “We will revert should we (have) an update to share.”
Banking sources said Kotak Bank could become a front runner in the race for IDBI Bank, as it is the only domestic contender to buy the government’s stake. While the government and Life Insurance Corporation (LIC) hold 94% in the bank, the transaction could involve acquiring a majority stake of up to 60.72%.
Reports suggest that the government aims to finalise the winning bidder by the end of FY26, with the deal potentially valuing IDBI Bank around $8-10 billion. Source added that the bank is in advanced discussions with government-appointed advisers, with final financial bids expected to be invited in the coming quarter, according to reports.
The government first announced its intent to divest IDBI Bank in February 2021. However, the formal process began on October 7, 2022, when the Department of Investment and Public Asset Management (DIPAM) invited expressions of interest (EoIs) for the bank’s strategic sale.
By January 2023, DIPAM confirmed it had received multiple EoIs. Around September, four shortlisted bidders who cleared the Reserve Bank of India’s ‘fit and proper’ assessment were granted access to the data room, initiating the buyer due diligence phase.