The strategic sale of IDBI Bank will be completed by October, the process for which has gained momentum, a senior government official said. Currently, processes such as the draft share purchase agreement (SPA) to be signed with prospective buyers are on track, sources said.
Shares of IDBI Bank closed at Rs 99.95 on Wednesday, up 0.1% from previous close on the BSE.
The department of investment and public asset management (Dipam) received multiple expressions of interest (EOI) on January 7, 2023 for a total of 60.72% stake in the bank, including 30.48% (approximately Rs 33,000 crore at current prices) from the government and 30.24% from promoter LIC, along with the transfer of management control in the bank.
The shortlisted bidders include Fairfax India Holdings (promoter of CSB Bank), Emirates NBD, and Kotak Mahindra Bank. These entities would be required to put their financial bids soon.
The stake sale in IDBI Bank would boost the non-debt capital receipts of the government which is targeting Rs 47,000 crore in FY26 from disinvestment and asset monetisation.
To make the sale smooth, the government could 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.