New Delhi, March 13 The strategic sale of IDBI Bank is likely to have been scrapped as the financial bids submitted by potential buyers were below the reserve price, sources said on Friday.
The government and LIC were jointly looking to sell 60.72 per cent in IDBI Bank and had floated an Expression of Interest (EoI) in October 2022. Financial bids were received on February 6.
Sources said the financial bids for the strategic sale of IDBI Bank were lower than the reserve price set by the inter-ministerial group on disinvestment, headed by secretaries in the finance ministry.
According to sources, the bids for IDBI Bank have been opened, and they were below the reserve price set by the IMG and agreed to by the core group on disinvestment, which is chaired by the Cabinet Secretary.
Fairfax, led by Prem Watsa, and Emirates NBD are reportedly to have submitted bids for the strategic sale of IDBI Bank.
Currently, the government and state-owned LIC jointly hold a 94.71 per cent stake in IDBI Bank. The government owns 45.48 per cent, and LIC holds 49.24 per cent in the lender. The government and LIC are looking to sell 60.72 per cent in IDBI Bank.
In October 2022, the government and Life Insurance Corporation of India (LIC) invited Expression of Interest (EoI) for selling 60.72 per cent stake in IDBI Bank. The Centre and LIC proposed selling 30.48 and 30.24 per cent stake, respectively.
In January 2023, the government said it had received multiple preliminary bids. Following that, the bids were sent for security clearance from the Ministry of Home Affairs (MHA) and a 'Fit and Proper' assessment from the RBI.
The shortlisted bidders who received both clearances later undertook due diligence of the bank.
In January 2019, the Life Insurance Corporation of India (LIC) completed the acquisition of a 51 per cent controlling stake in IDBI Bank for approximately Rs 21,624 crore to rescue the lender from heavy bad loans as part of the disinvestment process.
Consequently, the bank was categorized as a private-sector bank by the Reserve Bank of India.
In December 2020, the lender was reclassified as an associate company following the reduction of LIC's stake in the bank to 49.24 per cent.