The Government of India has decided to cancel the strategic disinvestment of IDBI Bank. As per the sources, the disinvestment has been cancelled as the financial bids received from investors were lower than the reserve price set for the sale transaction. The decision was taken after reviewing the bids submitted by the shortlisted bidders.
For example, if someone wants to sell a property and sets a minimum price of ₹1 crore but buyers offer only ₹80–85 lakh, the seller may decide not to proceed with the sale. Similarly, the government cancelled the sale of IDBI Bank because the offers received were below the minimum price it had set.
Bids Received from Two Investors
Among the shortlisted bidders, Fairfax Financial Holdings and Emirates NBD submitted their financial bids on February 6. Another shortlisted bidder, Kotak Mahindra Bank, had earlier indicated that it would not participate in the financial bidding process.
Government and LIC Planned to Sell 60.72% Stake
The strategic disinvestment plan involved a joint stake sale by the Government of India and Life Insurance Corporation of India (LIC). Together, they were planning to sell a 60.72 percent stake in IDBI Bank as part of the transaction.
Under this proposal, the government planned to sell a 30.48 percent stake in the bank and LIC was expected to sell the remaining portion of the stake.
At current market prices, the government’s 30.48 percent stake is estimated to be worth around ₹30,000 crore. The total 61 percent stake planned for sale by the government and LIC together is valued at around $6.5 billion based on prevailing market prices.
Life Insurance Corporation of India (LIC) became the majority owner of IDBI Bank on January 21, 2019.
This move made IDBI Bank a part of the LIC group and helped strengthen the bank’s capital position.
Reserve Price Higher Than Bids
As per standard government procedures and market practices, a reserve price was fixed for the transaction. This price was determined based on a business valuation carried out by the transaction adviser. The reserve price was finalized only after the sealed financial bids were received and evaluated. However, the bids submitted by investors were reportedly below the reserve price.
KPMG India Private Limited was appointed as the transaction adviser for the strategic disinvestment and sale of IDBI Bank, selected by the Department of Investment & Public Asset Management (DIPAM).
Disinvestment Process Began in 2023
The disinvestment process for IDBI Bank began earlier when the Department of Investment and Public Asset Management (DIPAM) invited expressions of interest for the stake sale.
DIPAM received multiple expressions of interest on January 7, 2023. After conducting due diligence and regulatory checks, including scrutiny by the Reserve Bank of India (RBI), four bidders were shortlisted to proceed to the next stage of the transaction.
However, since the financial bids did not meet the expected valuation, the government has now decided to cancel the strategic disinvestment of IDBI Bank for the time being.
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