• Government and LIC to sell stake in IDBI Bank


• Fairfax and Mahindra Bank lead the way for purchases


• IDBI Bank’s price will be based on SEBI’s formula

IDBI Bank Privatization News: The Central Government and Life Insurance Corporation of India (LIC) will sell their 60.72% stake in IDBI Bank. Both Fairfax Financial and Kotak Mahindra Bank are interested in buying the stake. Both these companies will soon present their financial proposals separately. The government and LIC together own more than 90% of IDBI Bank.

According to the information received, the minimum selling price or reserve price of the bank will be determined after receiving the financial bids and before opening them. This reserve price will be known only to certain government officials and will not be disclosed to the bidders. The reserve price will be determined based on the valuation of the bank’s business and assets, which has been completed. The government has also appointed an expert to assess the assets of IDBI Bank. Immovable assets such as land and buildings constitute approximately 3% of the bank’s total assets.

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The open offer price mechanism of the Securities and Exchange Board of India (SEBI) can be used as a benchmark to determine the reserve price. The investment process of IDBI Bank was initially scheduled to begin in October 2022, but was delayed due to several steps taken by the government to ease the process for potential buyers.

The government has set a target of raising 80,000 crore through investment and asset monetization by FY 2027. Public Asset Management Department Secretary Arunish Chawla said that IDBI Bank’s strategic disinvestment has reached the third phase, i.e. technical and financial bids have been floated. They will be able to provide more information on this issue by the end of this financial year.

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The company taking over IDBI Bank will have to get final approval from the Reserve Bank of India (RBI). RBI will ensure that the buyer meets the appropriate standards of the bank regulator. In addition, approvals from other regulatory authorities including the Competition Commission of India will also have to be obtained. The successful bidder will also have to make an open offer to the minority shareholders of IDBI Bank.