The Centre has revived the strategic sale of its stake in IDBI Bank, along with LIC's stake, a month after the two bids were rejected as they were way below the reserve price. According to reports from The Times of India, a fresh valuation exercise is being undertaken, given that the bank has a small free float, making price discovery through that route difficult. Officials will examine whether the sale process should be limited to the existing set of bidders or the process should be undertaken afresh. The idea is to expedite the exercise to ensure that global investors retain trust and the government raises resources to meet its ambitious funding requirements for investment and schemes.
The Centre holds a 45.5% stake in IDBI Bank, while LIC is the largest shareholder with a 49.2% holding. As reported by The Times of India, the exact details of the revived process are expected to be firmed up in the coming months, with the Centre chasing an ambitious disinvestment and asset monetisation target of ₹80,000 crore in the current fiscal year. Merely depending on InvITs by NHAI may not help the government achieve this target.
IDBI Bank shares have recovered in recent days after Finance Minister Nirmala Sitharaman said that the government will divest its stake in the entity and closed at ₹76.9 on BSE on Tuesday. According to The Times of India, some of the interested players, such as Kotak Mahindra, dropped out due to high pension burden that was coming with the bank. Government continuation as a stakeholder is another concern flagged by bankers, with many fearing the Centre may drive operations in a way that serves its interest. An executive with one of the entities that was interested in acquiring the bank stated, "If the govt is really serious about privatisation it should not have any remaining shares."
Officials are keen to expedite the exercise to ensure that global investors retain trust and the government raises resources to meet its ambitious funding requirements for investment and schemes. As reported by The Times of India, retaining the pool to players who had bid may open up the possibility of litigation, and there is recognition that the abandoned sale process was too long, lasting five years. The government aims to keep a shorter timeline critical in whatever shape the process is revived. Feedback from bidders is seen to be key, with the government recognizing that the abandoned sale process was too long.
