The strategic sale of IDBI Bank may stall as financial bids for the lender are lower than the floor price set by the government, people familiar with the matter said.
The Centre may now need to halt the disinvestment process and cancel the bids, one of the persons said. If it still intends to pursue the strategic sale of the lender, the government would have to start the bidding process afresh, which will take time, the person said.
An outright cancellation of the strategic sale of IDBI will make it harder for the government to realise its FY27 disinvestment and asset monetisation target of ₹80,000 crore. At Friday’s share price on the BSE, the sale of a 30.48% stake in IDBI Bank could fetch the government about ₹30,215 crore.
Department of Investment and Public Asset Management (Dipam) secretary Arunish Chawla didn’t immediately respond to a request for comment. There was no official word on the issue as well. The people cited earlier didn’t divulge details of the reserve price or the bidders.
In the current fiscal year, the actual disinvestment and asset monetisation mop-up has touched ₹34,400 crore, slightly exceeding the curtailed revised estimate of ₹33,847 crore. The Centre had received financial bids for IDBI Bank last month, Chawla had said, adding the bids would be “evaluated as per the prescribed procedure.”
While the government hasn’t named the suitors, Prem Watsa’s Fairfax Financial, and Emirates NBD had reportedly submitted financial bids.
The development comes at an inopportune time when the ongoing Iran war is hindering economic activity across the region and impacting revenue collections of various countries including India.
Currently, the Centre holds 45.48% and state-run Life Insurance Corp (LIC) 49.24% in IDBI Bank. Together, they aim to offload a 60.72% stake in the lender-30.48% by the government and 30.24% by LIC.
In early 2023, Dipam had announced that the IDBI Bank strategic sale had drawn interest from multiple players, without identifying them. Dipam had at the time urged the RBI to assess if these potential suitors are fit and proper for them to proceed. Subsequently, the banking regulator accorded its in-principle clearance.
Source: Economic Times