The much-delayed IDBI Bank divestment will be completed by the end of the current fiscal, Dipam secretary Arunish Chawla has said as the due diligence process by the bidders will be completed by next month following which the request for proposals will be called in. The news sent the shares of the bank up 8% intra-day.
Chawla also expressed confidence that this year, the department will be able to cross the Rs 47,000-crore target setting in the budget, as the department has already collected Rs 22,000 crore in the first quarter itself, most of which came not from actual stake sale but through listing Invits, though.
The only real stake dilution took place so far this year is that of Mazagaon Docks through an offer-for-sale of 4.83% shares in April and government has made Rs 5,230 crore.
The government and Life Insurance Corporation jointly own 95% in IDBI Bank, of which 60.72% is earmarked for sale under the ongoing disinvestment programme. LIC’s own stake is 49.24%. The bank became an LIC subsidiary from January 21, 2019, after the acquisition of an additional 82.75 crore shares.
“Due diligence by the RBI-qualified bidders is nearly complete and the remaining will be done by September. All necessary information relating to the divestment has been shared with the qualified bidders, and the technical document for the divestment is ready now. We hope to invite the financial bids (request for proposals) after the due diligence is over,” Chawla told reporters on the sidelines of a Ficci-organised capital market summit here Thursday.
"The expression of interest part of the process has been fully completed, and the qualified parties have been through a provisional fit and proper assessment by the RBI. They are now doing the due diligence, and all details have been made available to them through the data room. We are in an advanced stage of completing the due diligence exercise and further steps, essentially the RFP stage, we hope to complete by the end of the financial year," Chawla said.
We hope to call in the financial bids for IDBI Bank by the December quarter, and process will be completed before the end of the fiscal, he added.
On stake sales in other companies like LIC and a few mid-sized lenders like Uco Bank, to meet the minimum public float norms, Chawla said, “LIC and a few other companies including a few banks in which the government stake is over 90% will be brought down to 90% and those in which the stake is over 75% will be trimmed to 70%.
“Hopefully, stake sale in LIC will be done this fiscal itself as the government has already appointed the i-bankers for the same the department of financial services will decide on the exact quantum of stake sale,” he said.
IDBI Bank shares have surged 27% year-to-date, vastly outperforming the Nifty 50 index’s 5.5% rise. After the news break, the shares rallied close to 8% intra-day.