India’s Union Finance Ministry has said that IDBI Bank will continue to operate as an ‘Indian private sector bank’ following its strategic sale, Moneycontrol reported, citing PTI.
Upon completion of the privatisation, the Indian government’s remaining 15% stake in the bank will be regarded as ‘public shareholding’.
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The Department of Investment and Public Asset Management (DIPAM), a part of the finance ministry, provided the information in response to pre-EoI queries of potential investors.
When asked if IDBI Bank will be reclassified as a wholly-owned subsidiary if a foreign bank wins the bid, DIPAM said, “The Target (IDBI Bank) shall post consummation of the transaction continue to function and operate as an Indian private sector bank.”
In October 2022, the government invited bids for the bank and said that together with the Life Insurance Corporation of India (LIC), it will be selling a 60.72% stake in IDBI Bank.
The deadline for submitting an EoI is 16 December 2022.
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By GlobalDataCurrently, the Indian government owns 4.88 billion shares, or a 45.48% interest in IDBI Bank, while the state-backed life insurer has 5.2 billion shares or a 49.24% stake.
Of this, LIC will sell a 30.24% stake while the government will offload a 30.48% stake.
The winning bidder would have to submit an open offer to purchase the 5.28% public shareholding, the report said.
Following the sale, the government’s stake in the bank would fall to 15% and LIC will own a 19% stake.
In response to a question about whether the government and LIC would take part in the management and control of IDBI Bank following the sale, DIPAM stated, “The Bidders are informed that GOI (Government) has already made application for reclassification of its shareholding as ‘public’”.
Furthermore, DIPAM said that IDBI Bank subsidiaries could undergo corporate restructuring, such as a merger or demerger following the privatisation.
