The Department of Investment and Public Asset Management (DIPAM) on Friday rubbished media reports on the deferment of IDBI Bank disinvestment. It said “the transaction continues to be on track as per the defined process”.
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“Reports appearing in a section of the media indicating the possibility of deferment of IDBI Bank disinvestment are misleading, speculative and baseless. The transaction continues to be on track as per the defined process in post-EoI stage following receipts of multiple EoIs,” the DIPAM Secretary said in a tweet.
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The DIPAM statement comes after media reports said that the Union government may defer the $4-billion IDBI Bank privatisation plan over concerns that the unprecedented market volatility may deter prospective buyers.
The Centre is looking to divest 30.48 per cent stake, while Life Insurance Corporation (LIC) will divest 30.24 per cent in the bank. The government currently owns a 45.48 per cent stake in IDBI Bank, while LIC owns 49.24 per cent controlling stake in the lender.
The government has also received multiple bids for a majority stake in IDBI Bank. The government had on October 7 invited bids for the EoI of IDBI Bank with the deadline of December 16. The last date was later extended till January 7.
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Earlier this year, markets regulator Sebi allowed the government’s shareholding in IDBI Bank to be reclassified as “public” after its stake sale on condition that its voting rights do not exceed 15 per cent. Reclassification of the government’s remaining 15 per cent shareholding in IDBI as “public” will make the task of meeting the mandated 25 per cent minimum public shareholding norm simpler for the new buyer.
The government’s intent to reclassify its shareholding as “public” must be specified in the offer document at the time an open offer is made by the new acquirer of the lender, Sebi said.
In 2019, the state-owned life insurer infused Rs 21,624 crore into the bank. LIC is currently the promoter of IDBI Bank with Management Control and the government is the co-promoter.
On December 19, 2020, IDBI Bank was reclassified as an associate company due to the reduction of LIC shareholding to 49.24 per cent following the issuance of additional equity shares by the bank under a qualified institutional placement.
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In Union Budget 2021, the Centre had announced a target of Rs 1.75 lakh crore from stake sale in public sector companies and financial institutions, including two PSU banks and one insurance company in FY22.
Following this, in May 2021, the Union Cabinet gave its approval for the strategic divestment and transfer of management control in IDBI Bank.
