The government currently holds 45.48 per cent stake in IDBI Bank, while LIC holds a controlling 49.24 per cent stake in the lender.
DIPAM’s statement came after media reports suggested that the central government may postpone the $4 billion privatization of IDBI Bank due to market volatility.
The Department of Investment and Public Asset Management (DIPAM) on Friday rejected media reports of postponing the disinvestment of IDBI Bank. It said, “The transaction continues on track as per the defined procedure”.
Reports appearing in a section of the media indicating the possibility of postponing the disinvestment of IDBI Bank are misleading, speculative and baseless. In a tweet, DIPAM Secretary said, “After multiple EOIs are received, the transaction is in progress as per the process defined in the post-EOI stage.”
Reports appearing in a section of the media indicating the possibility of postponing the disinvestment of IDBI Bank are misleading, speculative and baseless. After multiple EOIs are received, the transaction remains on track as per the procedure defined in the post EOI stage. pic.twitter.com/HL8a1Xc3H5— Secretary, DIPAM (@SecyDIPAM) March 17, 2023
DIPAM’s statement came in the wake of media reports that the Center may shelve IDBI Bank’s $4 billion privatization plan due to concerns that unprecedented market volatility could affect potential buyers. Can
The Center is considering selling 30.48 per cent stake in the bank and 30.24 per cent stake in Life Insurance Corporation (LIC). The government currently holds 45.48 per cent stake in IDBI Bank, while LIC holds a controlling 49.24 per cent stake in the lender.
The government has also received several bids for majority stake in IDBI Bank. The government had invited bids for IDBI Bank’s EOI on October 7 with a deadline of December 16. The last date was later extended till January 7.
Earlier this year, markets regulator Sebi allowed the government’s stake in IDBI Bank to be reclassified as “public” following the sale of its stake, on the condition that its voting rights do not exceed 15 per cent. Reclassification of the government’s remaining 15 per cent stake in IDBI as “public” will make it easier for the new buyer to meet the mandatory minimum public shareholding norm of 25 per cent.
Sebi said the government’s intention to reclassify its stake as “public” should be specified in the offer document when the open offer is made by the new acquirer of the lender.
In 2019, the state-owned life insurance company infused Rs 21,624 crore into the bank. LIC is currently the promoter of IDBI Bank with management control and the government is the co-promoter.
IDBI Bank was reclassified as an associate company on December 19, 2020 due to reduction of LIC’s shareholding to 49.24 per cent following issuance of additional equity shares by the bank under qualified institutional placement.
In the Union Budget 2021, the Center had announced a target of Rs 1.75 lakh crore in FY22 from stake sale in public sector companies and financial institutions, including two PSU banks and an insurance company.
Subsequently, in May 2021, the Union Cabinet gave its approval for strategic disinvestment and transfer of management control in IDBI Bank.
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