Government and LIC together to dilute stake in IDBI Bank divestment

The Department of Investment and Public Asset Management (DIPAM) has invited expressions of interest (EoIs) from the potential bidders for strategic divestment of specified Government of India and LIC stakes in IDBI Bank along with transfer of management control.

The government and Life Insurance Corporation (LIC) will divest a 60.72 percent stake in the lender. The Center will divest a 30.48 percent stake while LIC will offload 30.24 percent. The last date and time for submission of IDBI Bank EoIs is December 16 and all the EoIs shall be valid for 180 days and can be further extended by another 180 days.

“Expressions of Interest are invited for Strategic Disinvestment of specified GoI and LIC stakes in IDBI Bank along with transfer of management control, “tweeted Secretary DIPAM.

“The successful bidder is required to make an offer to public shareholders of IDBI Bank,” DIPAM noted.

The criteria of ‘Fit and Proper’ which is used by regulatory authorities like RBI and SEBI will be imposed. In addition to that assessment by RBI at the EoI stage, it is clarified that the ‘successful bidder’ would also be subject to the ‘Fit and Proper’ assessment by RBI.

Listed private banks, NBFCs, and SEBI-registered AIFs are eligible to bid, as well as PE funds, foreign funds, and investment vehicles. However, DIPAM also stated that large industrial/corporate houses and individuals shall not be permitted to participate in this bidding process for the transaction, either on its own or as a part of a consortium.

The criteria of eligibility for bidding stakes of IDBI Bank is being set up.

Presently, the Central government holds 45.5 percent of IDBI Bank, and the Life Insurance Corporation of India owns 49.24 percent. Since the Cabinet Committee on Economic Affairs' approval, several meetings have been held within the government and between the government and the Reserve Bank of India, the Securities and Exchange Board of India, and the Insurance Regulatory and Development Authority of India over various issues related to stake sale.

The Cabinet Committee of Economic Affairs (CCEA) had given in-principle approval for strategic disinvestment and transfer of management control in IDBI Bank in May 2021.

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