Government to soon invite bids for selling stake in IDBI bank

15 Sep 2022 , 10:24 AM

Tuhin Kanta Pandey, the DIPAM secretary, stated on Wednesday that the department is working on the Expression of Interest (EoI) and would soon be inviting preliminary bids from investors for the privatization of IDBI Bank.

In May 2021, the Cabinet Committee on Economic Affairs gave its preliminary consent to the strategic disinvestment and transfer of management control in IDBI Bank. Currently, Life Insurance Corporation of India, the bank’s promoter, owns a 49.24 % holding in addition to the government’s 45.48 % ownership stake.

“We have been engaged in this for a while. In a first-of-its-kind deal, a bank will be privatized via a competitive bidding process. 94% of IDBI Bank is owned by the government and LIC together “During his speech at the “19th Annual Capital Markets Conference,” or “FICCI CAPAM 2022,” he remarked.

He said that when the bank exited the Prompt Corrective Action (PCA) framework, its performance had improved, which would pique investors’ attention.

Almost four years of improved financial performance later, in March 2021, the RBI withdrew IDBI Bank from its heightened regulatory supervision PCA framework. The Secretary of the Department of Investment and Public Asset Management (DIPAM) stated that the Expression of Interest (EoI) was being worked on and will be released soon.

Prior to requesting the first bids, the government and LIC will determine the exact percentage of IDBI Bank that they will sell. The EoI is anticipated to provide details about the amount of stake dilution.

The government has set a goal for the disposal of Rs65,000 crore in 2022—2023 (April-Mar). The majority of the Rs24,544 crore it has already raised came from the IPO of the nation’s largest insurer, LIC, in May of this year.

LIC shares were offered at a reduction to the price of their original public offering of Rs949 per share, at Rs865. Since that time, it has been trading below the cost of the issuance. LIC’s stock dropped 1.04 % on Wednesday to settle at Rs663.20. Pandey claimed that LIC is improving both its top line and bottom line by implementing a variety of actions.

“The management is undertaking post-listing measures, including as re-engineering the process to enhance the 13-month and 25-month consistency where LIC has been comparatively lower than peers. In fields like investor relations, chief development officer, chief technology officer, cash management, investigating actuarial valuation, and routine IEV (Indian Embeded Value) disclosures, LIC has been hiring new employees “he stated.

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