Govt Considers Offloading At Least 51 Per Cent Stake In IDBI Bank: Report
The government and LIC, which together own about 94 per cent in IDBI Bank, will formally seek to gauge buyer interest as soon as the end of September
The central government is considering offloading nearly 51 per cent of stake in state-run IDBI Bank Ltd., citing sources news agency Reuters said on Wednesday.
According to the report, officials said the government and the state-backed Life Insurance Corp. of India, which together own about 94 per cent of IDBI Bank’s shares, are in talks about how much of their stakes they plan to sell, the sources said. However, both the parties are expected to retain a stake in the bank after the sale, the sources confirmed the news agency.
A panel of ministers will make the final call on the structure of the deal. The government and LIC will formally seek to gauge buyer interest as soon as the end of September, one of the sources said.
Shares in IDBI Bank have risen 6.3 per cent in the past 12 months, giving the lender a market value of about Rs 42,470 crore ($5.3 billion).
Representatives for finance ministry and IDBI Bank declined to comment, while a representative for LIC didn’t immediately respond to Reuters’ requests for comment.
Authorities are planning to sell at least some of the government and LIC’s stakes in IDBI Bank and cede management control.
The Reserve Bank of India (RBI) will allow investors to buy a stake larger than 40 per cent, Bloomberg News has reported. Entities governed by the central bank normally need to seek permission to acquire stakes above that threshold, while non-regulated firms are capped at purchases of 10 per cent to 15 per cent.
According to the report, relaxing the criteria could widen the pool of potential buyers, energise the government’s privatisation plans and bolster its finances as it seeks to mop up Rs 65,000 crore from several disinvestments this year.
The government has already raised more than a third of the target, mostly from the $2.7-billion initial public offering (IPO) of LIC.
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