LIC stake in IDBI Bank to be sold with government: DIPAM

LIC’s stake in IDBI Bank will be sold along with the government’s stake in the lender’s disinvestment, but the exact quantum of stake dilution is yet to be decided, the Department of Investment and Public Asset Management (DIPAM) has said. The central government and LIC hold more than 94 per cent equity in IDBI Bank. LIC, which currently has management control, holds 49.24 per cent, while the Government of India holds 45.48 per cent. The non-promoter stake is 5.29 per cent. The cabinet had in May approved the strategic sale of the entire stake of the government and Life Insurance Corporation (LIC) in IDBI Bank Ltd. In response to queries received from potential transaction advisors, DIPAM clarified that since LIC’s stake will be sold simultaneously. Along with the government, a single transaction advisor will manage the entire share sale process. “The mandate received from CCEA is to off-load 100 per cent stake of Government of India and LIC with transfer of management control. However, the exact quantum is yet to be worked out. This will be determined, as we go through the transaction and find out investors’ interest, market appetite etc.” It is clarified that the stake of LIC in this transaction will be sold along with that of Government of India. So there is only one transaction advisor.’

DIPAM had last month invited bids from transaction consultants and law firms to provide management and advice on the strategic sale and transfer of management control in IDBI Bank. As per the eligibility criteria mentioned, the bidders should have at least one transaction of strategic disinvestment / strategic sale / M&A activities / private equity investment transactions of Rs.5,000 crore or more during the period April, 2016 to March, 2021. Should the insurance company LIC acquired a controlling stake in IDBI Bank in January 2019. Finance Minister Nirmala Sitharaman had said in her budget for 2021-22 that the process of privatization of IDBI Bank would be completed in the current financial year. The government has set a target of raising Rs 1.75 lakh crore from minority stake sale and privatization in the current financial year. Of the Rs 1.75 lakh crore, Rs 1 lakh crore will come from sale of government stake in public sector banks and financial institutions, while Rs 75,000 crore will come in the form of CPSE disinvestment proceeds.

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