Middle East banking powerhouse Emirates NBD and billionaire Prem Watsa-led Canada’s Fairfax Group are likely to have submitted EOI’s or expressions of interest earlier this week for a majority stake in IDBI Bank, multiple sources in the government and the industry familiar with the development told Moneycontrol.
“Emirates NBD and Fairfax Group are amongst bidders who may have expressed interest in the first stage of the process and put in EOI’s,” said one of the persons cited above.
A second person confirmed the names of the above two likely suitors and added that prospective bidders may rope in partners at a later stage post-consultation with the government and the RBI.
Additionally, a third person said that the name of Luxembourg-based private equity firm CVC Capital Partners was also doing the rounds as an interested party, but Moneycontrol could not independently verify if the firm had finally submitted an EOI.
“ It’s a high-profile deal and a big cheque and there is a likelihood that consortiums involving PE firms, who will be keen to partner, may be formed at a later stage,” the third person added.
All three sources above spoke to Moneycontrol on the condition of anonymity.
Moneycontrol could not elicit an immediate response from DIPAM, Emirates NBD, Fairfax Group and CVC Capital Partners and has sent email queries. This article will be updated as soon as we hear from the parties. Dipam Secretary Tuhin Kanta Pandey was unavailable for comment.
At the end of the last trading day this week, IDBI Bank’s market cap stood at Rs 63,492.93 crores. A 60 percent stake in the firm which is up for grabs would be worth around Rs 38,000 crores.
IDBI Bank: The Gulf Angle
Emirates NBD, the leading Banking Group in the MENAT region, was formed on 19 June 1963, as the National Bank of Dubai ( NBD), the first national bank established in Dubai and the UAE. According to the company website, NBD merged with Emirates Bank International (EBI) on 06 March 2007, to form Emirates NBD, the largest banking group in the region by assets. On 16 October 2007, the shares of Emirates NBD were officially listed on the Dubai Financial Market (DFM).
The merger between EBI and NBD to create Emirates NBD became a regional consolidation blueprint for the banking and finance sector as it combined the second and fourth largest banks in the UAE which provided services across Corporate, Retail, Islamic, Investment, and Private Banking, Global Markets & Treasury, Asset Management and Brokerage operations throughout the region.
Also Read: India will be the place to come to put money in: Fairfax founder Prem Watsa
As of 30th September 2022, the total assets of Emirates NBD were around $196 bn, according to its website. The acquisition of DenizBank represented a significant milestone for Emirates NBD with the Group expanding its presence to 13 countries, servicing over 17 million customers.
Emirates NBD has operations in the UAE, Egypt, India, Turkey, the Kingdom of Saudi Arabia, Singapore, the United Kingdom, Austria, Germany, Russia and Bahrain and representative offices in China and Indonesia with a total of 885 branches and 4,113 ATMs / SDMs. The Group has a significant retail banking franchise in the UAE and is a key participant in the global digital banking industry with 94 percent of all financial transactions and requests conducted outside of its branches, its website added. It also operates Liv., the lifestyle digital bank for millennials.
IDBI Bank: The Canadian Aspirant
The Fairfax group is owned by Indian-Canadian billionaire Prem Watsa who is very bullish on the Indian economy. Incidentally, the group is a controlling shareholder in private sector lender Catholic Syrian Bank ( CSB).
In a Moneycontrol report dated May 9, 2022 report Watsa said that he was excited about the India opportunity and believed that it would remain a favourable place for foreign investments.
The report added that Fairfax Group’s India portfolio included the likes of Bengaluru International Airport, IIFL companies, the National Stock Exchange (NSE), Thomas Cook India and Digit Insurance.
Later in August, Watsa said Fairfax Financial Holdings had invested $ 7 billion in India so far and would double it in the next 4-5 years, according to a PTI report.
Read More: Fairfax Financial to double investment in India over 4-5 years: Prem Watsa
Will CVC Capital Partners Join The Race?
Established in 1981, CVC is a leading global alternative investment manager focused on private equity, secondaries and credit with $137 billion of assets under management and a global network of 25 local offices. It is majority owned by its employees and led by its Managing Partners.
CVC's private equity platform manages €89 billion of assets and comprises four strategies: Europe/Americas, Asia, Strategic Opportunities and Growth. CVC's Credit platform has assets under management of €36 billion and the secondary business manages €12 billion.
The firm’s India portfolio includes Bengaluru-based HealthCare Global Enterprises, the country’s largest cancer care provider, speciality chemicals player Sajjan India and UnitedLex, a legal services outsourcing firm. In 2021, CVC Capital pipped the Adani Group to win the IPL’s Ahmedabad franchise ie Gujarat Titans, the reigning champions of the IPL.
THE MEGA IDBI BANK SALE: DEAL STRUCTURE AND TERMS
The Union Government said on January 7 that it has received multiple Expressions of Interest (EOI) for the strategic disinvestment of the stake held by it and Life Insurance Corporation of India (LIC) in IDBI Bank.
The transaction is expected to now move to the second stage, according to a tweet on January 7 from the Secretary, Department of Investment and Public Asset Management (DIPAM), Ministry of Finance.
The government and LIC together are looking to sell 60.72 percent of IDBI Bank and had invited bids from potential buyers in October. The last date for submitting an Expression of Interest (EoI) or preliminary bids was set at December 16, which was later extended to January 7.
Read More: IDBI Bank share price rises as government sweetens stake sale
Recently, Moneycontrol reported that the Securities and Exchange Board of India (SEBI) permitted government shareholding in IDBI Bank to be reclassified as public after a stake sale.
The government's decision to permit foreign funds and investment entities registered outside of India to control more than 51 percent of IDBI Bank has further made the terms and conditions of the transaction more attractive.
In order to reach its divestment goal of Rs 65,000 crore in FY23 (April–March), the Centre has so far raised roughly Rs 31,100 crore.
Also Read: Government steps up bid to sell IDBI Bank stake, talks to potential suitors including Fairfax’s Prem Watsa