fairfax In addition, potential contenders
The entry of R Thiagarajan-led Shriram – which deals in areas such as commercial vehicle financing, two-wheeler financing and micro, small and medium enterprise lending – with Prem Vats set the stage for at least two-way competition for IDBI Bank Can do. Fairfax Financial is also being considered a contender.
While talks are on to form a consortium with financial investors, Shriram has not reached a mutually acceptable commercial arrangement with investors who wish to join its consortium. If a consortium is formed, the non-bank lender will be the principal member.
According to sources, Sriram was among the 18 participants who participated in a virtual roadshow organized by the government in April to brief potential people about the privatization plan. The Government of India issued a Preliminary Information Memorandum on 7 October detailing its proposal to sell a majority stake in IDBI Bank. The last date for submission of EOI for IDBI Bank is 16th December.
A Sriram Group spokesperson said, “The question is speculative. As a matter of policy, we do not comment on speculation.”
Fairfax chairman Prem Vats told ET in an interview on April 7, when asked about his company’s interest in the upcoming privatization of banks, he said he was “looking at all those opportunities.”
The privatization of IDBI Bank has been designed as a two-stage process. In the first, the potential customer will submit the EOI. Their suitability to participate in the privatization process will be assessed by the Reserve Bank of India (RBI) and they will have to clear the regulator’s ‘fit and proper’ test and obtain government security clearance. In the second phase, those who have cleared the first phase will be allowed to do due diligence and submit the financial bid for the bank.
Life Insurance Corporation operated by Government of India and Government of India (LIC) are selling 60.72% stake in IDBI Bank as per the preliminary information memorandum issued by the Department of Investment and Public Asset Management (DIPAM). Their joint ownership in the bank is 94.72%. They will collectively hold 34% after the stake sale. Interested parties must have a minimum net worth of Rs 22,500 crore to submit EOI.