The government plans to invite expression of interest to sell its stake in LIC-controlled IDBI Bank by the next month-end, a senior official has said.
As part of the divestment, the government plans to sell its entire 45.48 per cent stake eventually. The government may look to sell around a 26 per cent stake in the bank, along with management control to attract investors, the official said.
IDBI Bank became a subsidiary of LIC with effect from January 21, 2019, following the acquisition of an additional 8,27,590,885 equity shares.
On December 19, 2020, IDBI Bank was reclassified as an associate company due to the reduction of LIC shareholding to 49.24 per cent following the issuance of additional equity shares by the bank under a Qualified Institutional Placement (QIP).
''We have been working on the proposal for a while now and most of the details have been finalised. We expect to invite the expression of interest from investors by end of next month or May,'' the official said.
The Cabinet Committee on Economic Affairs had given in-principle approval for strategic disinvestment and transfer of management control in IDBI Bank in May last year.
Necessary amendments to the IDBI Bank Act have already been made through the Finance Act 2021, and transaction advisors have been appointed.
IPO-bound Life Insurance Corporation (LIC) plans to retain some stake in IDBI Bank so that the insurer continues to reap the benefits of the bancassurance channel.
“Going forward, we would like to have some stake in IDBI Bank. The whole idea of us picking up stake in the bank was strategic in nature and that has not gone away at all,” LIC Chairman MR Kumar had said last month.
In fact, IDBI Bank has been the strongest contributor for the bancassurance channel, he said, adding that this was something that would help LIC to grow that particular channel in the post-IPO scenario.
Bancassurance is an arrangement between a bank and an insurance company, allowing the latter to sell its products to the bank’s customers and others through the branch network.
''I, as LIC Chairperson, would like to see the relationship continuing in the future as well,'' he had said.
On how much LIC would like to retain out of 49.24 per cent stake in IDBI Bank at present, Kumar said as of now there was no sense of the number as it was up to the Department of Investment and Public Asset Management (DIPAM) to kick off that exercise.
(With inputs from PTI)