The Indian government has initiated the process of strategic disinvestment in IDBI Bank by inviting bids to engage an asset valuer for the transaction. The government and the Life Insurance Corporation of India (LIC) are collectively selling approximately 61% of their stake in IDBI Bank, and multiple expressions of interest (EoI) have been received for the disinvestment.
The Department of Investment & Public Asset Management (DIPAM), on behalf of the government and LIC, recently released a request for proposal (RFP) to engage a reputable asset valuer entity registered with the Insolvency & Bankruptcy Board of India (IBBI). The selected entity will be responsible for valuing various aspects of IDBI Bank’s assets and providing necessary assistance throughout the strategic disinvestment process.
The RFP outlines that the contract with the asset valuer will be initially valid for three years from the date of the appointment letter, with the possibility of extending it for an additional year on existing terms and conditions. Interested parties have until October 9 to submit their bids for consideration.
In May 2021, the Cabinet Committee on Economic Affairs (CCEA) approved the strategic disinvestment of the government and LIC’s equity stakes in IDBI Bank, along with the transfer of management control.
The asset valuer will be tasked with valuing several aspects of IDBI Bank, including:
- Investments (including investments in subsidiaries, associates, joint ventures, and affiliates, as applicable).
- Loans and advances.
- Fixed assets.
- Other assets.
Additionally, the asset valuer will work closely with the transaction advisor and legal advisor appointed by DIPAM to ensure a smooth disinvestment process. IDBI Bank’s liabilities, which include deposits, borrowings, and other liabilities and provisions, will also be considered in the valuation.
As of March 2023, LIC holds a 49.24% stake in IDBI Bank, while the government holds 45.48%. Post the strategic disinvestment, the government and LIC will own 15% and 19%, respectively, in the bank, resulting in a combined holding of 34%.
The strategic disinvestment of IDBI Bank represents a significant step in the government’s ongoing efforts to divest its interests in various state-owned enterprises and promote privatization in key sectors of the economy.
