The Department of Investment and Public Assets Management (DIPAM) on October 7 invited potential bidders to submit expressions of interest (EoI) for the strategic divestment of the Indian government and LIC’s stake in IDBI Bank and the transfer of management control.

The government and the Life Insurance Company (LIC) will jointly divest the lender’s 60.72% stake. The Centre will sell a 30.48% stake, while LIC will sell a 30.24% stake. The last date and time to submit IDBI Bank EOIs are December 16, and all EOIs are valid for 180 days and can be extended for a further 180 days.

“Expression of interest is invited for strategic disinvestment of specific Government of India and LIC stake in IDBI Bank as well as the transfer of management control,” tweeted the Secretary, DIPAM.

“The successful bidder is required to make an open offer to the public shareholders of IDBI Bank,” DIPAM said.
“Fit and appropriate” criteria will be implemented. In addition to RBI’s assessment at the EoI stage, it was made clear that the “successful bidder” would also be subject to RBI’s “fit and proper” assessment.

Listed private banks, NBFCs and SEBI-registered PE funds, foreign funds and investment vehicles are eligible to bid.
However, DIPAM also stated that large industries/companies and individuals (natural persons) are not allowed to participate in the bidding process of the transaction either individually or as part of a consortium.

Eligibility Criteria for Bidding for a stake in IDBI Bank:
• Bidders must have net assets of at least Rs 22,500 crore or equivalent in their respective currencies
• Bidders must report Profit After Tax (PAT) for at least 3 of the past five years
• Consortium bids must have a maximum of 4 entities
• The lead member of the consortium must have at least a 40% equity contribution to the consortium
• Buyer needs to reduce IDBI Bank stake to 26% within 15 years
• 40% of the acquirer’s options will have a 5-year lock-in period

Currently, the central government holds a 45.5% stake in IDBI Bank, and LIC holds a 49.24% stake.

Since the approval of the Cabinet Committee on Economic Affairs, there have been stake sales within the government and between the government and the Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI) and Insurance Regulatory and Development Authority of India (IRDAI). In May 2021, the CCEA approved the strategic divestment and transfer of management control of IDBI Bank in principle.