Govt extends deadline for transaction, legal advisors to bid for managing IDBI Bank sale till Jul 22

The Department of Investment and Public Asset Management (DIPAM) had on June 22 invited bids from merchant bankers and law firms for managing and giving legal advice for the sale process. The last date to put in bids was July 13.

"… The competent authority has decided to extend the bid submission date of the… tender by nine days. The last date of bid submission will now be July 22, 2021," the DIPAM said in a notice.

DIPAM, which manages the government's equity, had also clarified to the merchant bankers that LIC's holding in IDBI Bank would be sold along with the government's stake, but the exact quantum of stake dilution would be decided later.

The central government and LIC together own more than 94 percent equity of IDBI Bank. LIC, currently having management control, has a 49.24 percent stake, while the government holds 45.48 percent in the bank. non-promoter shareholding stands at 5.29 percent.

The cabinet in May had approved the strategic sale of the entire stake of government and Life Insurance Corporation (LIC) in IDBI Bank.

In response to queries received from potential transaction advisors in IDBI Bank, DIPAM has clarified that since LIC's stake would be sold along with that of the government, a single transaction advisor would manage the entire share sale process.

''The mandate received from CCEA is to offload up to 100 percent stake of GoI and LIC along with transfer of management control. However, the exact quantum is yet to be worked out. It will be determined, as we go through the transaction and ascertain investors' interest and market appetite. ''It is clarified that LIC's stake will be sold along with GoI's shareholding in this transaction. So there is only one transaction advisor,'' it said.

The quantum of stake dilution would be declared before the RFP (Request for Proposal) stage of the transaction, it added.

Finance Minister Nirmala Sitharaman in her Budget for 2021-22 had said the process of privatization of IDBI Bank would be completed in the current fiscal. The government aims to mop up Rs 1.75 lakh crore in the current fiscal from minority stake sale and privatization.

Of the Rs 1.75 lakh crore, Rs 1 lakh crore is to come from selling government stakes in public sector banks and financial institutions. Rs 75,000 crore would come as CPSE disinvestment receipts.