The government on Wednesday extended the deadline to submit preliminary bids for the IDBI Bank privatisation till January 7. The government and LIC together are looking to sell 60.72 per cent of IDBI Bank and had invited bids from potential buyers in October. The last date for submitting an expression of interest (EoI) or preliminary bids was December 16.
Following that transaction advisors received requests for an extension of the deadline. In a notice, the Department of Investment and Public Asset Management (DIPAM) said the last date for submission of EoI is January 7, 2023, instead of December 16, 2022.
Also, the last date for submission of physical copies of the EoIs has been extended to January 14, from December 23. The government and the Life Insurance Corporation (LIC) hold 94.71 per cent of IDBI Bank and are looking to offload 60.72 per cent in the state-owned bank. The successful bidder will have to make an open offer of acquisition of 5.28 per cent of the public shareholding.
Earlier, DIPAM had said that the potential buyers should have a minimum net worth of Rs 22,500 crore and must report a net profit in three out of the last five years to qualify to bid for the bank. In addition, a maximum of four members would be permitted in a consortium.
Also, the successful bidder would be required to mandatorily lock in at least 40 per cent of the equity capital for five years from the date of acquisition. 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.
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.
According to recent media reports, the government is reaching out to markets regulator Sebi for a two-year relaxation in complying with the public shareholding norms in the case of IDBI Bank. The relaxation is expected to make the strategic sale of the bank more attractive to a potential investor as there will be more time for complying with the norm.
According to the rules, companies are required to have a public shareholding of at least 25 per cent within three years of being listed. However, state-owned entities are exempt from the minimum public holding rule. IDBI Bank is already listed now but after the privatisation, it will have to meet the minimum public shareholding norms within three years.
Shares of IDBI bank were trading at Rs 57.15 apiece, down 1.64 per cent over the previous close on the BSE.
(With Inputs From PTI)
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