The Department of Investment and Public Asset Management (DIPAM) notified that media reports speculating a potential deferment of the $4 billion divestment plan of IDBI Bank by the government are baseless. Following this, the shares of the bank surged 5.6 percent during Tuesday’s trade.
The government had previously announced its plans to divest its majority stake in the public sector bank and had invited bids from potential buyers in October.
Numerous newscasts reported that the Union government may delay the $4 billion IDBI Bank privatization strategy due to fears that the unprecedented market unsteadiness could frighten potential purchasers.
However, DIPAM has now clarified that the government is committed to its divestment plan and the process is on track as defined.
During Tuesday’s trade, the stock opened at a price of Rs. 45.90 per share against the previous close of Rs. 45.25 per share and grew further during the early trading session to touch an intraday high of Rs. 47.80 per share. It was trading at ₹46.90, up by 3.65 percent, at 11:20 a.m. on the NSE.
The stock touched a 52-week high of Rs. 62 on January 09, 2023, and a 52-week low of Rs. 30.50 on July 06, 2022, indicating that at the current level, the stock is trading over 53 percent above its 52-week low and 24.3 percent below its 52-week high.
The stock has declined by nearly 6.67 percent in the last one month. However, in the past six months, it has given a positive return of nearly 6.3 percent. In the past one year, it has gained only 4 percent.
"Reports appearing in a section of the media indicating the possibility of deferment of IDBI Bank disinvestment are misleading, speculative, and baseless. The transaction continues to be on track as per the defined process in the post-EoI stage following receipts of multiple EoIs," the secretary of Department of Investment and Public Asset Management informed through Twitter.
The Government of India had announced plans to privatize IDBI Bank, in a first-of-its-kind deal for the Indian banking space. The government expects the sale to set the stage for the sale of two state-run banks and is expecting a valuation of at least $4 billion for its 60.72% stake in IDBI Bank to be sold in the first half of FY24.
Earlier, the Securities and Exchange Board of India gave its consent to reclassify the government’s stake in the bank as 'public' after the strategic disinvestment. The consent was 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 Limited is a development finance institution under the ownership of the Life Insurance Corporation of India and the Government of India. It was established in 1964 as the Industrial Development Bank of India, a development finance institution, which provided financial services to the industrial sector, its website shows.
