The Department of Investment and Public Asset Management (DIPAM), which oversees the administration of government equity in operating companies, tapped buyout funds and bump-bracket financiers during investor roadshows held at several global banking centers, at events such as Industry sources who participated in the said.
KPMG helps with the transaction process
One of the people mentioned above said, “The talks are in the early stages and the government has not yet fixed any deadline for the share sale.” “However, buyout funds and some domestic strategic investors have been excluded,” said a person who attended one such event of DIPAM.
KPMG is helping
with the transaction process. The proposed disinvestment of government equity in the bank has reportedly got the approval of the central bank.
DIPAM officials in New Delhi could not be immediately reached for their comments. Carlyle, TPG and KPMG declined to comment. ET’s queries sent to Fairfax, controlled by Indian-Canadian billionaire Vats, did not elicit any response.
IDBI Bank and LIC did not comment on the matter.
Global private equity firms are exploring the option of tying up with local strategic investors to create bidding entities. Alternatively, they can also form a consortium with other investors.
The process of issuance of Expression of Interest (EoI) will be followed by stages of formal bidding. If the current momentum in the stock markets continues, the process is expected to start this year itself.
Government and LIC together hold more than 94% equity
Bank. The United States holding in the bank, which had the highest proportion of bad loans, is valued at over ₹41,000 crore at current market prices.
technical Info
“With the proposed disinvestment, the bank (IDBI Bank) is likely to get access to advanced information and technologies along with global best practices,” said Soumitra Majumdar, partner at law firm J Sagar. “This will pave the way for the bank’s future growth, enhance shareholder value and help the broader credit ecosystem.”
Established in 1964 as Industrial Development
A specialized development financial institution, it can emerge as one of the leading commercial banks in the country.
The government has invested Rs 27,000 crore in IDBI Bank between 1 April 2010 and 31 March 2021. Data shows the government acquired 4.5 billion shares in the bank during this eleven-year period, as ET reported earlier this month. LIC too had invested over Rs 25,000 crore in the last six years.
Both TPG and Carlyle were claimants for LIC’s stake in IDBI Mutual Fund. Separately, Fairfax, which holds a controlling stake in the south-based Catholic Syrian Bank, will also consider merging the entities to create a larger banking institution in the country.
Road shows organized abroad
DIPAM has conducted road shows in the US, Europe and the Middle East.
The government had said in May last year that the Cabinet Committee on Economic Affairs had given in-principle approval for strategic disinvestment along with transfer of management control in IDBI Bank. Shares of IDBI Bank rose 0.74% to close at ₹40.60 on the BSE on Wednesday. Its current market value is ₹43,655 crore.