Centre set to relaunch IDBI Bank privatisation after bids miss reserve price: Report

The government holds a 45.48% stake in IDBI Bank, while Life Insurance Corporation of India owns 49.24%, with the remaining shares held by the public

• IDBI Bank privatization to resume after bids missed reserve price
• Government reviewing reserve price process and stock reliance
• Existing bidders may skip regulatory clearances if reapplying

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The Centre is likely to relaunch the privatisation of IDBI Bank from the beginning after financial bids fell short of the reserve price, leading to the cancellation of the process last week, the Economic Times reported, citing people familiar with the matter.

A ministerial panel overseeing the disinvestment is expected to be briefed soon and will take a final decision, though early indications suggest the government is inclined to restart the exercise, the Economic Times reported.

Officials are also expected to review key aspects of the earlier process, including how the reserve price was determined. The Economic Times reported that concerns were raised over heavy reliance on the bank's stock price, particularly given its limited public float, which may leave it open to market distortions.

The government holds a 45.48% stake in IDBI Bank, while Life Insurance Corporation of India owns 49.24%, with the remaining shares held by the public.

The Economic Times reported that the bank's stock has declined about 19% since the bids were scrapped, closing at Rs 74.28 on the NSE, near its 52-week low. Earlier, the reserve price had been benchmarked to a rally in the stock, which touched a 52-week high of Rs 118.38 ahead of the bidding process.

Bids were submitted by entities including Fairfax Financial, led by Prem Watsa, and Emirates NBD, the Economic Times reported.

While the process will begin afresh, existing bidders may not need to seek regulatory clearances again if they choose to reapply, which could help avoid delays. However, all new bids will be evaluated under the prescribed guidelines.

There are no plans to merge IDBI Bank with any other state-run lender, the report added. The eventual winning bidder will still need to meet the Reserve Bank of India's 'fit and proper' criteria, secure approvals from regulators including the Competition Commission of India, and make an open offer to minority shareholders.