IDBI Bank privatization process underway; Decision on dilution amount after roadshow: DIPAM Secretary


Depending on investor reaction, the government may decide to sell its entire stake all at once or in tranches

Depending on investor reaction, the government may decide to sell its entire stake all at once or in tranches

IDBI Bank’s privatization process is underway and the scale of the stake sale will be decided after the conclusion of the roadshow, Ministry of Investment and Public Assets Management (DIPAM) secretary Tuhin Kanta Pandey said on Friday.

Preparations are underway for IDBI Bank’s privatization, he said during a media interaction at LIC’s IPO briefing.

“The extent of the exit will be known after the roadshow and then the structure of the EoI will be finalized. One thing is very certain that management control will be passed on. It is currently with LIC. But management control of how much equity there will be will need to be decided when we have finalized the structure of EoI,” he said.

Depending on investor reaction, the government may decide to sell its entire stake all at once or in tranches. The government holds a 45.48% stake in the bank, while LIC holds a 49.24% stake.

In May last year, the cabinet’s economics committee approved in principle the strategic divestment and transfer of management control of IDBI Bank.

Necessary changes to the IDBI Banking Act have already been made by the Finance Act 2021 and Transaction Advisors appointed.

IDBI Bank became a subsidiary of LIC effective January 21, 2019 following the acquisition of an additional 8,27,590,885 shares.

On December 19, 2020, the Lender was reclassified as an Associate due to the reduction of LIC’s interest to 49.24% following the Bank’s issuance of additional shares in a Qualified Institutional Placement (QIP).

Referring to LIC’s initial public offering (IPO), Mr. Pandey said that listing LIC is part of the government’s long-term strategic vision.

Defending reducing LIC’s IPO size to 3.5% from the previous 5%, he said it was the right size given the capital markets environment and expected a significant retail stake in one of India’s most valuable companies.

Even after the reduced size of around £20,557 billion, LIC’s IPO will be the largest-ever IPO in the country.

So far, the amount mobilized from Paytm’s IPO in 2021 was the largest ever at 18,300 crore, followed by Coal India (2010) at almost 15,500 crore and Reliance Power (2008) at 11,700 crore.

In February, the government planned to sell a 5% stake in the company.

LIC has set the price range for the issue at ₹902-949 per share. The share sale will be via an offer for sale (OFS) of up to 22.13 billion shares and will open on May 4th and close on May 9th. The shares are expected to be listed on May 17th.

The offer includes a reservation for eligible employees and eligible policyholders. Retail investors and eligible employees are discounted at Rs 45 per share and policyholders are discounted at £60 per share.

LIC was formed by the merger and nationalization of up to 245 private life insurance companies on 1st September 1956 with an initial capital of Rs 5 crore.

The individual product portfolio consists of 32 individual products (16 participating products and 16 non-participating products) and seven individual optional driver benefits. The insurer’s group product portfolio comprises 11 group products.

As of December 2021, LIC had a market share of 61.6% in terms of premiums or GWP, 61.4% in terms of new business premiums, 71.8% in terms of number of individual policies issued and 88.8% in terms of number issued by the group guidelines. PTI JD DP DP BAL BAL

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