The Center last week issued the Preliminary Information Memorandum (PIM) for the Expression of Interest (EoI) invitation to kick-start IDBI Bank’s sale process. After the strategic divestment, the center will sell such a 30.48% stake and LIC will sell a 30.24% stake, totaling 60.72% in IDBI Bank, as the details shared on the stock exchanges suggest.
The deadline for PIM to submit written requests is October 28, while the deadline for EoI submission is December 16.
The sale process began more than a year after the Cabinet Committee on Economic Affairs (CCEA) gave the government and the LIC approval to sell 100% of its stake in IDBI Bank in May 2021, along with a transfer of management.
The Center retained KPMG India as transaction advisor and Link Legal as legal advisor to provide advisory services and administer the transaction. The IPs – ie private banking firms, foreign banks, non-bank financial firms, companies registered with SEBI as alternative investment funds or investment vehicles incorporated outside of India – are allowed to submit EoIs and participate in the bidding process for the transaction, either individually or as part of the consortium.
The PIM excludes large industrial or corporate groups from the bidding process. 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.
IDBI Bank’s ownership pattern shows that LIC is a majority shareholder, holding a 49.24% stake. The government is a co-sponsor with a share of 45.48%. Together they make up about 94% of the shares in the bank. LIC is currently the managerial control promoter and the government is the co-promoter. LIC had first acquired a stake in indebted IDBI Bank in 2018 and over the years increased its stake and became the majority shareholder.
Separately, IDBI Bank has signed a Memorandum of Understanding with Vay Network Services as its first fintech partner for e-SCF (end-to-end digitization) services. IDBI Bank has an existing CMS and e-Trade platform, and with the launch of e-SCF, the bank intends to offer complete digital solutions for corporate banking and MSME clients.
