To kick-start the process of IDBI Bank’s strategic divestment, the Center released the Preliminary Information Memorandum (PIM) for the EoI invitation to the bank on Friday. Going forward, the central government and Life Insurance Corporation of India (LIC) will each sell just over 30% stakes in the bank along with the transfer of management control.
The central government owns 45.48% as of March 31, 2022 while LIC owns 49.24% stake in IDBI Bank.
“It has now been decided that according to the strategic divestment of IDBI Bank, the Government of India will sell such number of shares equivalent to 30.48% and LIC will sell such number of shares equivalent to 30.24%, which a total of 60.72% of the share capital of IDBI Bank, together with the transfer of management control in IDBI Bank,” according to the PIM issued by the Department of Investment and Public Asset Management (Dipam).
The deadline for PIM to submit written requests is October 28th, while the EoI deadline is December 16th.
The IPs are allowed to submit their EoIs and participate in the bidding process for the transaction, either individually or as part of the consortium.
The PIM sets the eligibility standards for the interested parties, saying that private sector banks, foreign banks, non-bank financial firms and alternative investment funds (AIF) are eligible to participate in IDBI Bank’s strategic sale. Bidders can bid individually or as part of a consortium.
The PIM excludes large industrial/corporate houses from the bidding process. “It is hereby clarified that large industrial/corporate houses and individuals (natural persons) may not participate in this bidding process alone or as part of a consortium,” the PIM said, adding that “large industrial/corporate houses’ means an industrial /Group of companies with assets of ₹5,000 crore or more where non-financial operations of the group account for 40% or more of total assets or gross income.
“When assessing whether the prospective developer or investor belongs to a large industrial house or a company associated with a large industrial house, the decision of the RBI will be final,” the document says.
A minimum net value of ₹22,500 crore is required as financial criteria for filing the EoI and for consideration in the RFP phase of the transaction.
