Shares of IDBI Bank climbed over 5 percent on Monday, January 9 on reports citing that the Middle East banking powerhouse Emirates NBD and billionaire Prem Watsa-led Canada’s Fairfax Group are likely to have submitted Expression of Interests (EOIs) earlier this week for a majority stake in IDBI Bank.
The government and LIC together are looking to sell 60.72 percent in 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 set at December 16, which was later extended to January 7.
Currently, the government and the Life Insurance Corporation (LIC) hold 94.71 percent in the lender. The successful bidder will have to make an open offer for the acquisition of 5.28 percent of public shareholding.
During Monday’s trade, the stock opened at a price of Rs. 61.50 per share against the previous close of Rs. 59 per share and grew further during the early trading session to touch a 52-week high of Rs. 62 per share. It was trading at ₹60, up by 1.69 percent at 11:05 a.m. on the NSE.
The stock has grown nearly 9.5 percent in the last one month. Moreover, in the past six months, it has given a positive return of nearly 83 percent. In the past one year, it has returned nearly 16 percent to its shareholders.
On Saturday, January 7, the Centre received multiple expressions of interests (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.
“Multiple expressions of interest received for the strategic disinvestment of Govt and LIC stake in IDBI Bank. The transaction will now move to the second stage,” department of investment and public asset management secretary Tuhin Kanta Pandey tweeted.
The deadline for submitting Expressions of Interest was Saturday. The second round of the bidding process will involve financial bids from the shortlisted bidders. The deal is anticipated to be completed in FY24.
The government's decision to allow foreign funds and investment companies registered outside of India to own more than 51% of IDBI Bank has further enhanced the deal's terms and conditions.
The Securities and Exchange Board of India has given its consent to reclassify the government’s stake in the bank as 'public' after the strategic disinvestment. The consent has been given on the condition that the government’s voting rights in the lender should not exceed 15% of the total voting rights of the bank, IDBI Bank reported.
Additionally, the government has asked Sebi to consider its remaining interest in IDBI Bank as a financial investment because it would not have any influence over the bank or special rights. The government will also not have any representation on the bank's board.
IDBI Bank Ltd., established in 1994, is a banking company with a market capitalization of ₹63,439.17 Crore. India is pushing for a valuation of around 640 billion rupees ($7.7 billion) for state-owned IDBI Bank in what could be the biggest sale of the government's stake in a lender in decades, according to a person familiar with the matter.