IDBI Bank strategic sale process begins; Centre, LIC to offload over 60% stake

Kick-starting the process of strategic disinvestment of the IDBI Bank, the Centre on Friday issued the preliminary information memorandum (PIM) for inviting expression of interest EoI for the bank. Going forward, central government as well as the Life Insurance Corporation of India (LIC) will sell a little over 30% stake each in the bank along with the transfer of management control.

Central government holds 45.48% while LIC holds 49.24% stake in IDBI Bank as on March 31, 2022.

"It has now been decided that pursuant to the strategic disinvestment of IDBI Bank, government of India shall sell such number of shares representing 30.48% and LIC shall sell such number of shares representing 30.24%, aggregating to 60.72% of the equity share capital of IDBI Bank, along with transfer of management control in IDBI Bank," said the PIM issued by the Department of Investment and Public Asset Management (Dipam).

The last date for submission of written queries by on PIM is October 28 while the due date for submission of the EoI is December 16.

The IPs are allowed to submit their EoIs and participate in the bidding process for the transaction, either individually or as a part of the consortium.

Laying down the eligibility norms for the interested parties the PIM says private sector banks, foreign banks, Non Banking Finance Companies, Alternative Investment Fund (AIF) are eligible to participate in the strategic sale of IDBI Bank. The bidders can bid individually or as a part of consortium.

The PIM debars large industrial/corporate houses from the bidding process. "It is hereby clarified that large industrial/corporate houses and individuals (natural persons) shall not be permitted to participate in this bidding process on its own or as a part of a consortium," the PIM said adding that 'large industrial/corporate houses' shall mean an industrial/corporate group with assets of ₹5,000 crore or more with the non-financial business of the group accounting for 40% or more in terms of total assets or gross income.

"In taking a view on whether the interested party, either as promoters or investors, belong to a large industrial house or to a company connected to a large industrial house, the decision of the RBI will be final," said the document.

The financial criteria for submitting the EoI and for being considered for the RFP Stage of the transaction, a minimum net worth of ₹22,500 crore is needed.