IDBI Bank share price surged 6 percent in the early trade on June 23 on report the government may sell 26 percent stake in the company.
The Centre, on June 22, kick-started the process of selling its stake in IDBI Bank, by issuing Request for Proposals (RFP) to hire transaction and legal advisors to advice on the sale process.
However, these RFPs have deviated from previous transactions in a very crucial way. In previous divestment RFPs, whether to hire advisors or seek bids from prospective investors, it has been clearly mentioned how much stake in the relevant company the government would like to offload.
Not in the case of IDBI Bank though. The government has not yet finalized how much stake to sell and will do so in consultation with the Reserve Bank of India, LIC Ltd, and the appointed transaction advisor, a senior government official told Moneycontrol.
The stake offloaded could be anything between 26 percent (the minimum required to transfer management control) and the centre's entire stake, which is currently at 45.5 percent, the official said.
Also Read - Govt may sell a minimum 26% stake in IDBI Bank; seeks legal, transaction advisors
At present, IDBI Bank is classified as a private sector bank by the RBI with government shareholding at 45.5 percent, Life Insurance Corporation of India (LIC) shareholding at 49.24 percent and the Non-promoter shareholding at 5.29 percent.
The Department of Investment and Public Asset Management, in the RFPs issued, said that the bids by interested investment banks, financial institutions, consulting firms and law firms should be submitted by July 13.
LIC completed the acquisition of controlling stake in IDBI Bank in January 2019 making it the majority shareholder of the bank.
The Cabinet Committee on Economic Affairs had cleared the 'strategic divestment' of IDBI in early-May. LIC will reduce its shareholding in IDBI Bank in parallel with the central government, and with an intent to relinquish management control.
At 09:21 hrs IDBI Bank was quoting at Rs 40.10, up Rs 1.50, or 3.89 percent on the BSE.
The share touched a 52-week high of Rs 55.75 and a 52-week low of Rs 26.35 on 07 July, 2020 and 27 January, 2021, respectively.
Currently, it is trading 28.07 percent below its 52-week high and 52.18 percent above its 52-week low.