IDBI Bank's stock jumped 11% on Monday

11 Oct 2022 , 09:36 AM

After the finance ministry solicited initial bids for strategic disinvestment in the institution, shares of IDBI Bank increased 11% to Rs47.40 in intraday trading on Monday in an otherwise sluggish market. The government and the LIC intend to sell a combined 60.7% of the lender.

At 09:16 AM, the stock was trading 9% higher at Rs46.65, while the S&P BSE Sensex was down 1.2%. In the first few minutes of trading, 6.9 million shares were exchanged on the NSE and BSE together. Compared to a 6% increase in the benchmark index over the previous three months, the market price of IDBI Bank has increased by approximately 50%.

According to the strategic disinvestment of IDBI Bank, “the government shall sell such number of shares representing 30.48 percent; LIC shall sell a such number of shares representing 30.24 %, aggregating to 60.72 % of the equity share capital of IDBI Bank, along with transfer of management control in IDBI Bank.”

The equity share capital of the IDBI Bank is now 45.48 % owned by the Indian government and 49.24 % by LIC.

According to the expression of interest (EoI), private-sector banks, foreign banks, non-banking financial companies (NBFCs), alternative investment funds (AIFs) registered with the Securities and Exchange Board of India, or any other fund incorporated outside of India, are among the entities eligible to bid for IDBI Bank. The bidder has the option of submitting its Expression of Interest alone or as a consortium.

According to central bank criteria, the winning bidder will have 15 years to reduce the equity to 26%, and 40% of the equity capital will be locked in for the first five years following the date of acquisition.

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