NEW DELHI: The government has received multiple expressions of interest (EoI) for strategic disinvestment of IDBI Bank, the government said on Saturday.
The Department of Investment and Public Asset Management (DIPAM) tweeted on Saturday saying: “Multiple Expressions of Interest received for the Strategic Disinvestment of Government and LIC Stake in IDBI Bank. The transaction will now move to the second stage.”
Saturday was the last day for sending EoIs. As per sources, both domestic and foreign, banking and non-banking entities have submitted their EoIs for acquiring the government and LIC’s stake in IDBI Bank.
A DIPAM official told this newspaper that after receiving EoIs, the due diligence process would start. “The interested bidders would have to pass the RBI’s Fit & Proper test, get clearance from the Ministry of Home Affairs (MHA) and then they would be given access to the virtual data room. After the due diligence process is complete, then only the interested parties would be allowed to put in their financial bids,” said the official. When asked how long it will take to complete the processes, the official said it would depend from transaction to transaction and the size of the complexity.
“In this case, the bidders will have to pass RBI’s Fit & Proper test, so it will take time,” he said. The DIPAM official also said the disinvestment process is unlikely to get completed in the current financial year.
The government is eyeing a stake sale in the bank, in which the government and LIC together hold 94.71%. The government is looking to offload 60.72% of the state-owned bank. The Securities Exchange Board of India (Sebi) has recently approved the reclassification of LIC and the government’s residual shareholding in IDBI Bank as public holding after privatisation. However, the market regulator has set a condition that the voting rights of the government can’t exceed 15% of the voting rights in the bank.
The successful bidder will have to make an open offer for acquiring 5.28% public shareholding. After the stake sale, the government will own 15% shares, while LIC will hold 34%. The bidder will also have to compulsorily lock in at least 40% of the equity capital for five years from the date of acquisition.