The government could try to sell around 26% stake in the bank along with management control to attract investors
The government could try to sell around 26% stake in the bank along with management control to attract investors
The government plans to invite an expression of interest (EoI) to sell its stake in LIC-controlled IDBI Bank by the end of next month, a senior official said.
As part of the sale, the government plans to eventually sell its entire 45.48% stake.
The government could try to sell about 26% stake in the bank along with management control to attract investors, the official said.
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, IDBI Bank 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).
“We’ve been working on the proposal for a while now and most of the details are finalized. We expect to be able to invite expressions of interest from investors by the end of next month or May,” the official said.
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.
IPO-bound Life Insurance Corporation (LIC) plans to retain a portion of shares in IDBI Bank so the insurer can continue to reap the benefits of the bancassurance channel.
“In the future we would like to have a stake in IDBI Bank. The whole idea that we had a stake in the bank was strategic and that hasn’t gone away at all,” LIC chairman MR Kumar had said last month.
In fact, IDBI Bank has been the strongest contributor to the bancassurance channel, he said, adding that this is something that would help LIC grow that particular channel in the post-IPO scenario.
Bancassurance is an agreement between a bank and an insurance company that allows the latter to sell its products to the bank’s customers and others through the branch network.
“As LIC Chairman, I want the relationship to continue in the future,” he had said.
Asked how much of the 49.24% stake in IDBI Bank LIC currently wants to keep, Mr Kumar said there was currently no point in the number as that is a matter for the Department of Investments and Public Assets Management (DIPAM). Start this exercise.
