IDBI Bank Privatisation: India’s market regulator has approved Life Insurance Corporation’s (LIC) request to be reclassified as a public shareholder in IDBI Bank, paving the way for a strategic sale in the lender, Life Insurance Corporation of India (LIC) said in a filing to the stock exchange on Sunday (August 24). India has completed due diligence for the IDBI Bank stake sale and plans to invite financial bids between October and December.
Let us tell you that recently, Arunish Chawla, Secretary, Department of Investment and Public Asset Management (DIPAM), on Thursday expressed hope that the stake sale in IDBI Bank will be completed in the current financial year. Eligible bidders have almost completed their due diligence process. Talking to reporters during the annual capital market conference of industry body FICCI, Chawla also said that the government has raised Rs 20,000 crore in the first quarter itself against the target of asset monetization of Rs 47,000 crore for the current financial year.
How much stake does the government have
The government, which holds a 45.48% stake in IDBI Bank, and state-owned Life Insurance Corporation of India, which holds 49.24%, together plan to sell 60.7% of the bank. The sale process was first announced in 2022. Reuters has reported that interested buyers include Emirates NBD and Canadian billionaire Prem Watsa. LIC was previously classified as a promoter shareholder in IDBI Bank, a status it received after it took control of the bank in 2019. As a promoter, LIC had board representation and strategic influence over the bank’s operations. The reclassification removes these rights from LIC, reducing its role to that of a financial investor.
According to separate presentations by the insurer and the bank, the Securities and Exchange Board of India (Sebi) has given the approval on the condition that LIC will not hold control or be represented on the board, and its voting rights will be limited to 10%. The presentations said LIC will have to reduce its stake to 15% or less within two years of the bank’s reclassification. Arunish Chawla, secretary, Department of Investment and Public Asset Management, has said the sale is targeted to be completed within the current financial year. IDBI Bank shares have gained nearly 25% so far this year.
