The divestment process of IDBI Bank will complete in the fiscal year 2023-24, Department of Investment and Public Asset Management (DIPAM) Secretary Tuhin Kanta Pandey said in an interview with ETNow on Monday.
Pandey had earlier tweeted that multiple expressions of interest were received for the strategic disinvestment of Centre and LIC’s stake in IDBI Bank.
Calling the process a unique one, Pandey claimed that there is no intention to have management control post divestment. Reserve price fixation will take place after financial bids have been placed, he said.
Pandey said that while the names and the number of bidders for IDBI Bank cannot be revealed as yet, the next stage in the process will be related to giving access to virtual data room and solving queries.
“Due diligence process timeline will depend on many factors, usually takes around 3-4 months,” Pandey said.
The transaction will now move to the second stage in which the potential bidders will conduct due diligence before putting financial bids.
The government and LIC together are looking to sell 60.72 per cent in IDBI Bank and had invited bids from potential buyers in October. The last date for submitting Expression of Interest (EoI) or preliminary bids was set at December 16, which was later extended to January 7.
Currently, the government and the Life Insurance Corporation (LIC) hold 94.71 per cent in the lender. The successful bidder will have to make an open offer for acquisition of 5.28 per cent of public shareholding.
Earlier, DIPAM had said that the potential buyers should have a minimum net worth of Rs 22,500 crore and must report a net profit in three out of the last five years to qualify to bid for the bank.
In addition, a maximum of four members would be permitted in a consortium. Also, the successful bidder would be required to mandatorily lock in at least 40 per cent of the equity capital for five years from the date of acquisition.
India’s market regulator last week allowed the government to reclassify its shareholding in IDBI Bank as “public” post sale, making it simpler for the new buyer to meet the minimum public shareholding norm.
The finance ministry also extended an exemption to the new buyer of IDBI Bank that allows it to maintain a 25% minimum public shareholding in the lender.
The time limit to increase the public shareholding in the lender would be specified in due course, the government said.
A successful sale of IDBI Bank to a private buyer through a competitive bidding process would be first such deal in the Indian banking sector, setting the stage for more such sales in the coming years.
(With inputs from Reuters & PTI)
