The divestment process at IDBI Bank has moved into its next leg. Financial due diligence is currently underway at the bank, by bidders who have shown interest to acquire 60.72 per cent stake in the bank.
Sources in the know say financial due diligence, for the purpose of the ongoing divestment, commenced in the first week of July. “A dedicated team at the bank has been set up to handle the process,” said a highly placed source. The process is expected to conclude by September and the final bids may be in by December.
As reported by businessline earlier, Kotak Mahindra Bank and Canadian billionaire Prem Watsa-led Fairfax India Holdings have shown interest in acquiring majority stake in IDBI bank. The other bidders are said to be Sumitomo Mitsui Financial Group and Emirates NBD.
Financials of IDBI Bank went through a detailed round of scrutiny before the divestment as part of vendor due diligence conducted by KPMG in December 2020. The purpose was to ascertain the quality of the bank’s loan book in the wake of Covid and its asset quality. This was a precursor to the divestment which commenced in October 2022 when the Department of Investment and Public Asset Management (DIPAM) invited bids for divesting 60.73 per cent stake with the government and LIC offloading 30.48 per cent and 30.24 per cent stake, respectively.
“Financials of the bank has significantly improved since the last round of due diligence conducted over two years ago. Much of the Covid-related pain is well assessed and reasonable part of the stressed loans are well provided. Therefore, the financial due diligence is expected to be a smooth process which should conclude within finite timelines,” said another person aware of the matter.
The government is keen to wrap up the transaction by March 2024, according to sources.
IDBI Bank was bailed out by LIC when it picked up 51 per cent stake in the bank from the government in 2019. In February 2020, the government announced its intention to divest its holdings in the bank and in October 2022, opened bids for the same. On January 7, 2023, DIPAM said it has received multiple EoIs for the strategic divestment in IDBI Bank.