Govt said to seek $7.7 billion valuation for IDBI Bank stake sale: Report

IDBI Bank

Govt is pushing for a valuation of around $7.7 billion for state-owned IDBI Bank in what could be the biggest sale of the government’s stake in a lender in decades, a person familiar with the matter told Bloomberg.

The government earlier this month invited bidders for a 60.72% stake in the Mumbai-listed lender.

Bidders could get regulatory approvals and security clearances after November as the process proceeds, according to the person.

The valuation target means the administration is seeking a premium of roughly 33%, based on IDBI Bank’s market value of about $5.8 billion as of Thursday.

IDBI Bank’s improved profitability could support the valuation target, said the person, who asked not to be identified as the information is confidential. Potential investors ranging from domestic and foreign banks to non-banking financial companies and private equity funds have expressed initial interest in the asset, the person added.

Government and the state-owned Life Insurance Corp. of India together own about 95% of IDBI Bank.

IDBI Bank was penalized by the central bank in 2017 with several restrictions on lending after its bad-loan ratio surged and capital ratios depleted. LIC acquired 51% of the lender in 2019 in a government bailout of the firm. The Reserve Bank of India removed sanctions on the bank last year paving the way for its proposed sale.

(With inputs from Bloomberg)