Government receives Multiple EoIs for IDBI Bank

The Centre has received multiple expressions of interest (EoIs) from domestic and foreign investors for the 60.72% stake in IDBI Bank, which will go to the successful bidder along with management control. Government is keen for the strategic disinvestment of its and LIC stake in IDBI Bank. The transaction will now move to the second stage. Saturday was the last date for submission of EoIs. In the second stage, shortlisted bidders would be asked to place financial bids. The transaction is expected to conclude in FY24.

On October 7 last year, the Centre invited EoIs for IDBI Bank and offered to sell a total of 60.72% stake worth over Rs 38,550 crore at current market prices, comprising 30.48% from the government and 30.24% from LIC, along with the transfer of management control. Foreign banks, funds and investment vehicles incorporated outside India are allowed to bid for IDBI Bank.

The government has offered many benefits like an extended period for complying with the minimum public shareholding (MPS) norms and relief from tax on notional gains if share price of the bank rises post financial bids up to transaction conclusion. Also, the buyer will make open offer to public at the winning bid price (no additional cost even if share prices rise). Also, even if the share prices rise after financial bids are submitted and by the time the transaction concludes, there won’t be any tax liability on the notional gain in value to the buyer, sources said.

Sebi has allowed the Centre to reclassify its holding in IDBI Bank as ‘public’ following the divestment of its stake, on the condition that its voting rights do not exceed 15%. The regulator also said the buyer will have to adhere to the minimum public shareholding norms of 25% within a year of acquisitions, as per its regulations applicable in merger and acquisition transactions. The public holding in IDBI Bank is 5.28%.

Sebi’s categorisation of the Centre’s residual stake of 15% in the lender would mean that the new promoters of the bank would have to just offload another 7-10% to meet the public float norm of 25%. The winning bidder will also be permitted to make an open offer to the public at the same price that it would be paying to the government and LIC.