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The proposed strategic sale of IDBI Bank continues to remain under scrutiny, with an open offer for minority shareholders emerging as a possibility if the government proceeds with the transaction.
The government and Life Insurance Corporation of India (LIC) are looking to sell a combined 60.72% stake in IDBI Bank. The proposed sale includes a 30.48% stake held by the government and a 30.24% stake held by LIC.
The strategic disinvestment process, which began with an Expression of Interest (EoI) in October 2022, moved through several rounds before financial bids from Fairfax Financial Holdings and Emirates NBD came in below the reserve price. The government later sought revised financial bids from the two bidders.
An open offer could become part of the process if a successful bidder acquires the proposed stake. Under the disinvestment framework, the successful bidder would also need to meet regulatory requirements, including the Reserve Bank of India’s ‘fit and proper’ assessment and approvals from other statutory authorities.
The successful bidder would also need to comply with the requirement to make an open offer to minority shareholders of IDBI Bank.
The issue assumes importance because the government and LIC together currently hold 94.71% of IDBI Bank. The government owns 45.48%, while LIC holds 49.24%.
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EAS Sarma, former secretary to the government, raised concerns over the proposed transaction. He said the deal could potentially raise “scam-like fears” similar to the Central Electronics Ltd case, which the Center had to abort hurriedly.
The IDBI Bank sale comes after more than three years of efforts to complete the strategic disinvestment. The process previously faced a setback after financial bids fell below the reserve price.
The government remains committed to the privatization process, with different options under consideration to complete the transaction. Earlier reports indicated that revised bids from Fairfax Financial and Emirates NBD were under consideration, with the government examining ways to move the sale forward without restarting the entire process.
The outcome will depend on the evaluation of the bids, regulatory clearances, and the government’s final decision on the strategic sale.
