IDBI bank believes that LIC will recover the investment made in it, by the time privatization is completed

21 Oct 2022 , 08:42 AM

By the time the lender is privatized, the share prices of the state-owned insurance giant LIC are anticipated to have recovered their investment of Rs21,624 crore they had put in IDBI Bank, an official told PTI.

According to the official, who talked to PTI, the share price of IDBI Bank has increased from Rs35 per share to Rs45 per share as of right now since the process to privatize the bank began in May of last year.

“We anticipate that the price of IDBI Bank’s stock will increase. The price is anticipated to rise toward the level when LIC acquired its investment in 2019 ” PTI reported.

Together, the government and Life Insurance Corp (LIC) own 94.72% of IDBI Bank. The government owns the remaining 45.48% of this, leaving LIC with a 49.24% stake. 5.28% are held by public shareholders.

At an average price of Rs61 per share, LIC paid Rs21,624 crore to acquire a 51% stake in IDBI Bank in 2019. The shareholding of LIC was reduced to 49% after a QIP offering in December 2020.

Additionally, the RBI’s Prompt Corrective Action (PCA) framework was removed from IDBI Bank thanks to an Rs9,300 crore investment from the government and LIC.

On the BSE, shares of IDBI Bank closed at Rs44.95, an increase of 2.16% from the previous closing.

The sale of a 61% stake will bring in roughly Rs29,000 crore for the exchequer at the current market pricing.

The government invited EoIs on October 7, 2022, for investors interested in purchasing a 60.72% ownership in IDBI Bank together with managerial control. The deadline for making initial offers was set for December 16.

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