The department of investment and public asset management (Dipam) has appointed an asset valuer for the strategic sale of IDBI Bank, and it is also deliberating on a draft share purchase agreement (SPA) to be signed with prospective buyers.
Dipam 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 25,800 crore at current prices) from the government and 30.24% from promoter LIC, along with the transfer of management control in the bank.
Shares of IDBI Bank closed at Rs 78.70 on Wednesday, up 2.27% from previous close on the BSE.
“We have established a virtual data room. The facility to answer queries is going on well, and we have appointed an asset valuer. We are also deliberating on shareholder agreement,” Chawla said.
The strategic sale of IDBI Bank should conclude in another 6-7 months, sources said, adding that financial bids would be invited soon.
To make the sale smooth, the government should give assurance in the SPA 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, officials reckon.
Walmart acquired 77% of Flipkart for $16 billion in 2018, making it the biggest e-commerce acquisition in the world at the time.
The government is expecting to get some premium over the current market price of IDBI Bank given the bank’s splendid turnaround and performance in the last few years.