Privatisation

IDBI Bank Privatisation Update: KPMG Conducts Final Due Diligence of IDBI Bank


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The long-awaited divestment process of IDBI Bank has entered a crucial phase, with global consultancy firm KPMG undertaking closing due diligence for the lender. Sources indicate that this step is key to moving the process forward, with the findings set to inform the financial bids from potential investors.

Current Progress

According to a senior source familiar with the matter, closing due diligence began about a week ago and is expected to take approximately a month to complete. Following this, the report will be presented to the bank’s board before being shared with prospective bidders.

The Department of Investment and Public Assets Management (DIPAM) is likely to invite financial bids for the bank’s 60.7% stake after the due diligence concludes. However, with bids expected no sooner than March 2025, the divestment process is now likely to extend into FY26.

Importance of Closing Due Diligence

Closing due diligence is an essential step in finalizing a deal, particularly for a long-running divestment process. This phase ensures that the key assumptions in the transaction documents remain valid. If any discrepancies are found, they are factored into a revised valuation of the entity.

In IDBI Bank’s case, KPMG’s vendor due diligence conducted in December 2020 laid the groundwork for investor interest. That report supported the expression of interest (EOI) process, which opened in October 2022. Since then, several potential suitors have been cleared by the Reserve Bank of India as “fit and proper” to proceed with the financial bid.

Interested Investors

Reports suggest that notable entities, including Prem Watsa-led Fairfax, Kotak Mahindra Bank, and Emirates NBD, have expressed interest in acquiring the bank’s majority stake.

Background of the Divestment

The government announced its decision to divest IDBI Bank in the 2021 Union Budget. Later, Life Insurance Corporation of India (LIC) and the government decided to offload their combined stake of 60.72%—with LIC holding 30.24% and the government 30.48%.

Despite initial enthusiasm, the process has faced delays, though sources suggest the current momentum could prevent further setbacks.

Looking Ahead

With the completion of closing due diligence, DIPAM will move closer to inviting financial bids. The government’s aim is to ensure that the divestment process adheres to good corporate governance practices while securing a fair valuation for IDBI Bank.

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