IDBI Bank Strategic Transaction To Close by Fiscal End After RBI Clearance: DIPAM Secretary

New Delhi: The strategic transaction of IDBI Bank is expected to be completed by the end of the current financial year, subject to regulatory clearance from the Reserve Bank of India (RBI), DIPAM Secretary Arunish Chawla has said.

The successful bidder will submit its technical papers to the RBI and present its credentials, including details required to meet additional compliance and regulatory requirements, he told PTI.

After the RBI clears the successful bidder, he said, the share purchase agreement will be signed, paving the way for the transaction to be completed before the end of the current financial year.

Addressing concerns over the interests of minority and retail shareholders, the Department of Investment and Public Asset Management (DIPAM) Secretary assured that their interests would be fully protected as part of the transaction.

After the share purchase agreement is signed, the strategic buyer will be required to make an open offer to minority shareholders, providing them an opportunity to tender their shares in accordance with applicable regulations.

In addition, he said, the market regulator has directed Life Insurance Corporation of India (LIC) to reduce its stake in IDBI Bank from 19 per cent to 15 per cent post-divestment.

The reduction would increase the bank’s public float by an additional 4 percentage points, making more shares available to retail investors and other public shareholders.

Chawala said IDBI Bank restructuring is the biggest ever strategic transaction and would attract the largest FDI.

The government on Wednesday approved the sale of a 60.72 per cent stake in IDBI Bank to Canada’s Fairfax Financial Holdings for about Rs 53,000 crore (USD 5.5 billion), in what would be the largest foreign investment in an Indian bank and a major milestone in the country’s long-delayed banking privatisation drive.

Fairfax will be the strategic buyer for the government’s 30.48 per cent stake for about Rs 26,620 crore and LIC’s 30.24 per cent stake for about Rs 26,440 crore.

Canadian billionaire Prem Watsa-led Fairfax will pay Rs 81 per share, higher than the benchmark fair value of Rs 75.99 determined by two independent valuation agencies.

The deal – the largest in the banking space – marks a major milestone in a long-delayed effort to privatise IDBI Bank and reduce state ownership of commercial enterprises. The sale process began in 2022 and faced a setback earlier this year when initial bids fell below the government’s reserve price.

Allaying IDBI employees’ fears ahead of the lender’s strategic sale, Chawla said that existing employees’ service conditions will be fully protected.

“IDBI Bank is a banking company which is being restructured as a going concern,” he said.

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