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The Centre on Saturday said that it has received multiple bids for stake sale in IDBI Bank. Government along with Life Insurance Corporation of India (LIC) together plan over 60 per cent stake sale in the bank along with management control as part of strategic disinvestment.
The government and LIC’s current shareholding in IDBI Bank are at 45.48 per cent and 49.24 per cent, respectively.
“Multiple Expressions of Interest received for the Strategic Disinvestment of Govt and LIC Stake in IDBI Bank. The transaction will now move to the second stage,” Tuhin Kanta Pandey, Secretary in the Department of Investment and Public Asset Management (DIPAM) said in a tweet. However, he did not disclose the name of bidders.
Now, based on the Expression of Interests (EoI), bidders will be shortlisted and will be asked to submit financial bids, following which final buyers will be selected. The process is expected to completed in the next fiscal.
Reclassification
Earlier this week, in an effort to push the sale, the market regulator, Securities and Exchange Board of India (SEBI) agreed to the government’s request for re-classification of its holding in the bank as “public” post the disinvestment, subject to conditions. The market regulator has relaxed the requirements specified in its Listing Obligations and Disclosure Requirements (LODR) regulations relating to reclassification of promoter/ promoter group entities following an application made by the government through the Department of Investment and Public Asset Management (DIPAM).
While giving relaxation from the aforementioned regulation, SEBI said two conditions need to be fulfilled: the voting rights of the government shall not exceed 15 per cent of the total voting rights of the bank; and the intention of the government to get its shareholding re-classified as public holding shall be specified in the letter of offer dispatched to the bank’s shareholders in connection with the open offer made by the new acquirer. The re-classification as public shareholder could reassure potential global investors that the government and LIC as promoter/promoter group may take a hands-off approach after the disinvestment.
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To attract more suitors, Govt plans tax waivers for IDBI Bank buyer
The finance ministry mulls relaxing tax clause, as the buyer of IDBI Bank may have to pay additional tax if the share price rises post the final bidAfter completion of the strategic disinvestment, IDBI Bank has to make an application to the stock exchanges for re-classification of government holding under public category, SEBI said. Further, the new acquirer has to ensure compliance with minimum public shareholding requirements within one year from the completion of open offer.
The relaxation in LODR regulations comes in the wake of government requesting SEBI to treat the residual holding of the government in IDBI Bank as a pure financial investment and accordingly re-classify it as “public”. This is subject to conditions that the government, post-disinvestment does not exercise control over the affairs of the bank, does not have any special rights with respect to the bank, and is not represented on its Board of Directors nor act as key managerial personnel.
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