During a presentation before the Department of Investment and Public Asset Management (DeepamTraders said that in the recently held, most eligible transaction advisors gave a time-frame of 50-52 weeks to complete multiple phases of IDBI Bank’s privatization process.
However, the government intends to complete the transaction during the current financial year itself. Thus the merchant banker has to find a buyer in about 26 weeks or six months.
According to market sources, seven bids were received by Deloitte Touche Tohmatsu India LLP, Ernst & Young LLP, ICICI Securities Ltd, JM Financial Ltd, KPMG, RBSA Capital Advisors LLP and SBI Capital Markets Ltd.
DIPAM, on behalf of the Government of India, had floated a tender in June inviting bids from reputed professional consulting firms or investment bankers or merchant bankers or transaction advisors from financial institutions to facilitate and assist the strategic disinvestment of IDBI Bank. The last date for submission of bids was July 13.
KPMG made the lowest bid of Re 1 and was chosen as the transaction advisor, market sources said, adding that the firm would assist the government in selling Re 1 of Rs.
The cabinet in May had given in-principle approval for the transfer of management control as well as strategic disinvestment of IDBI Bank.
central government and LIC IDBI owns more than 94 percent equity of the bank. LIC, which currently has management control, holds 49.24 per cent, while the government holds 45.48 per cent. The non-promoter stake is 5.29 per cent.
The Transaction Advisor would be required to advise and assist the Government on the modalities and timing of disinvestment; To recommend the requirement of other intermediaries required for the process of sale/disinvestment and help in their identification and selection with appropriate reference terms.
The Transaction Consultant will assist in preparation of all documents like Preliminary Information Memorandum (PIM), conduct road shows to generate interest among potential buyers and suggest measures to achieve optimum price.
The consultant will also assist IDBI Bank in setting up the e-data room and assisting in the smooth conduct of the due diligence process.
As per the eligibility criteria mentioned in the RFP, bidders are advised to undertake at least one transaction of strategic disinvestment/ strategic sale/ M&A activities/ private equity investment transactions of size of Rs. 5,000 crore or more during the period April 2016 to March should be given. 2021.
The shareholding limit to be split by the central government and LIC will be decided at the time of structuring the transaction in consultation with the RBI, the government had said earlier.
Insurance company LIC had acquired a controlling stake in IDBI Bank in January 2019.
Finance Minister Nirmala Sitharaman had said in her budget for 2021-22 that the process of privatization of IDBI Bank would be completed in the current financial year.
The government has set a target of raising Rs 1.75 lakh crore from minority stake sale and privatization in the current financial year. Of the Rs 1.75 lakh crore, Rs 1 lakh crore is to come from sale of government stake in public sector banks and financial institutions and Rs 75,000 crore through CPSE disinvestment proceeds.