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Government Finalizing List of Potential Bidders for IDBI

25 Jul 2024 , 11:44 AM

According to Tuhin Kanta Pandey, secretary of the Department of Investment and Public Asset Management (DIPAM), authorities are nearing the “advanced stage” of concluding the process to find “fit and proper” buyers for a majority stake in IDBI Bank. The strategic sale of the state-run lender is anticipated to be completed this fiscal year.

In a post-budget interview, Pandey stated that the government would stick to a “calibrated disinvestment strategy” without a set “big-bang target” and make sure state-run businesses continue to make money for themselves whether or not they are candidates for disinvestment.

The government wants to sell off 30.48% of its 45.48% ownership in IDBI Bank. Another 49.24% stakeholder in the bank, the state-run Life Insurance Corporation of India, intends to sell 30.24% of its shares.

The government might receive more than ₹31,700 crore from the sale of a 30.48% stake in IDBI Bank, according to Wednesday’s BSE share price.

Last year, DIPAM said that several parties had expressed interest in the IDBI Bank strategic sale, but it did not identify them.

The virtual data room containing exclusive information about the state-run lender will be accessible to prospective bidders upon their approval by the Reserve Bank of India, enabling them to begin their due diligence. Before the government seeks financial bids from the bidders, the share purchase agreement and related matters must also be resolved.

“All these things take a considerable amount of time but we hope to conclude the transaction this fiscal,” Pandey added.

According to him, the government has been pressuring state-run businesses to be more accountable, just like a majority shareholder would. According to him, this has played a part in the increase in company profitability and stock market success.

The central public sector enterprises’ (CPSEs) growth strategy will receive more attention. “Their performance is being watched more carefully, in terms of profitability, return on capital, completion of projects, capex planning, regular dividend, etc.,” he stated.

He added that the CPSEs can investigate repurchase opportunities wherever they arise.

In essence, buyback refers to a company’s decision to reduce the number of shares it offers on the open market by repurchasing shares from its current shareholders.
The government uses buybacks as a mechanism to disinvest from its share in CPSEs and to ensure that any idle capital is well utilized.

The FY25 interim budget included the disinvestment and asset monetisation targets rather than announcing them independently, which is a unique approach.

For feedback and suggestions, write to us at editorial@iifl.com

Related Tags

  • Bidders
  • Government
  • IDBI Bank
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