IDBI Bank Stake Sale: Kotak Mahindra Likely Frontrunner; Fairfax, Oaktree Capital Also In Race
The government aims to finalise the sale of its stake in IDBI Bank in fiscal year 2026.
Kotak Mahindra Bank is likely to be the frontrunner in acquiring government's stake in IDBI Bank, with Fairfax and Oaktree Capital also in the race, sources told NDTV Profit on Friday.
Kotak Mahindra Bank, however, offered no comments when reached out to by NDTV Profit.
Sources suggest that IDBI Bank's market cap of over Rs 1 lakh crore makes it difficult for investors to buy 60% stake in the bank. But Kotak Mahindra Bank with the benefit of equity currency, may look at part-cash, part-equity merger deal to buy IDBI Bank.
Notably, the government aims to finalise the sale of its stake in IDBI Bank in fiscal year 2026. While the Centre owns 45.48% stake in the lender, another 49.24% is owned by the state-run Life Insurance Corporation of India.
The Department of Investment and Public Asset Management (DIPAM) is managing the sale of a 61% stake in IDBI Bank.
Earlier, Emirates NBD and Fairfax were seen as primary suitors for IDBI Bank and had even conducted the due diligence process. However, in October, Emirates NBD announced it will infuse $3 billion to acquire a majority stake in RBL Bank.
With Emirates NBD now focussing on its announced $3 billion infusion for a majority stake in RBL Bank, Fairfax was left as the main competitive suitor.
The government hopes to invite bids for IDBI Bank stake sale by the third quarter of this fiscal, DIPAM Secretary Arunish Chawla had said in August.
The share purchase agreement — which outlines the sale terms — had been cleared by an inter-ministerial group, people in the know had told NDTV Profit in June.
A confidential reserve price will be set for the transaction. The Centre expects to raise Rs 40,000–Rs 50,000 crore from the sale.
The DIPAM secretary also mentioned that the government has completed the process for appointment for merchant banker and legal advisor for public financial institutions for three years and expandable to five years for LIC's offer-for-sale.
Chawla, while speaking on capital review of public enterprises, said that it is being undertaken to ensure that they meet their target and continue to energise the economy. He also added that PSU now account for 15% of the market cap and they will continue their performance milestone and their capex programme to sustain their growth momentum.
