IDBI Bank shares jump 12% as divestment process advances to next stage

IDBI Bank shares jump 12% as divestment process advances to next stage

Shares of IDBI Bank jumped up to 12 percent to Rs 82 apiece on January 16 after Moneycontrol reported that the state-run lender has moved to the next stage of its divestment process.

Earlier, Moneycontrol had revealed that global consultancy firm KPMG is conducting the closing due diligence on the bank. Once the report is completed, it will be presented to the bank’s board and subsequently shared with potential buyers to form the foundation for financial bids.

Following this, the Department of Investment and Public Asset Management (DIPAM) will invite bids from interested investors for a 60.7 percent stake in IDBI Bank. However, with bids not expected before March, the divestment is likely to extend into FY26, the report noted.

The closing due diligence is also viewed as a good corporate governance measure. KPMG previously conducted a vendor due diligence in December 2020, which laid the groundwork for potential investors to submit their expressions of interest (EOI) starting in October 2022.

READ MORE: Closing due diligence underway at IDBI Bank

Shares of IDBI Bank had  hit a 52-week high of Rs 107 per share on July 29, 2024, but have since remained rangebound and were down 10 percent over the past six months, compared to a 5 percent decline in the benchmark Nifty 50 index.

The state-run lender is set to report its third-quarter results on January 20, 2025. According to its provisional update for Q3FY25, IDBI Bank's net advances grew by 18 percent year-on-year (YoY) to Rs 2.1 lakh crore, while total deposits increased by 9 percent YoY to Rs 2.8 lakh crore.

On December 31, 2024, the board of directors approved raising Rs 10,000 crore through long-term bonds to fund infrastructure and affordable housing projects. Up to Rs 5,000 crore will be raised by March 31, 2025, with the remaining amount to be raised in FY26.

Details on the bond's maturity, coupon rate, and other specifics were not disclosed. This move aligns with a broader trend among banks raising funds via infrastructure bonds, amidst slower deposit growth across the banking sector.

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