Senior government officials will review options for divestment in IDBI Bank Ltd. after bids did not meet expectations, pushing the process further. Cabinet Secretary TV Somanathan will chair a meeting with the Department of Investment and Public Asset Management (DIPAM) and key ministries to consider whether to seek fresh bids for the stake sale or defer the process amid heightened market volatility linked to the Iran conflict, sources told NDTV Profit on Wednesday.
If rebidding is chosen, the entire process may have to be restarted, sources indicated.
Financial bids received for the PSU bank from Canada's Fairfax Financial Holdings Ltd. and Dubai's Emirates NBD last week were below the government's reserve price. The Centre holds 45.48% equity stake in IDBI Bank and the Life Insurance Corp. 49.24%.
As per the proposed plan, the government wanted to divest a 30.48% stake in the lender, valued at around Rs 36,000 crore at current market prices. Additionally, LIC was preparing to sell a 30.24% stake, making the total stake to 60.72%, which was an estimated combined valuation of nearly Rs 72,000 crore.
The privatisation plan of IDBI Bank was approved during the Union Budget of February 2021. Sources said the government remains committed to divesting its stake in fiscal 2027.
Equity markets have been volatile this month amid the escalating conflict between Iran and the US. IDBI Bank stock has seen a sharp value erosion since the start of the year.
ALSO READ: IDBI Bank Cracks Over 30% In A Month On Divestment Woes — Should You Buy, Sell, Hold?
Shares of IDBI Bank traded 3.6% higher as of 9:30 a.m. on the NSE, compared to a 0.5% advance in the Nifty 50. The stock is up 3.8% on a 12-month basis and down 27% year-to-date.
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