The Finance Ministry on Friday invited expression of interest (EoI) for strategic disinvestment in IDBI Bank, a move which would allow sale of a joint stake of the government and
of up to 60 per cent in the bank.
As per the bid details from the Department of Investment and Public Asset Management (DIPAM), LIC will cut its stake in IDBI Bank to 19 per cent from 49 per cent, while the government will cut its share to 15 per cent from 45 per cent .
Following the update, shares of IDBI Bank plunged 11 per cent to Rs 47 on Monday. At 9:50 am the stock was trading at Rs 46. The scrip had settled at Rs 43 on Friday.
According to the conditions of the EoI, private sector banks, non-banking finance companies (NBFCs), foreign banks and even alternative investment funds registered with SEBI can bid for IDBI Bank.
The successful bidder has been mandated to scale down equity to 26 per cent in 15 years. However, in the first five years starting from the date of acquisition, 40 per cent of equity capital would remain captive or locked.
Furthermore, it has been made mandatory by the government for interested buyers of IDBI Bank to provide details for security clearance from the Ministry of Home Affairs (MHA) in the first stage of the bidding process.
This is the first time that the center has made MHA clearance necessary. In all instances of CPSE privatisation, the government would seek details regarding security clearance of the bidders at the second stage of the bidding process.