India c.bank begins evaluating potential bidders for IDBI Bank -sources (updated)
13/04/2023 10:00
(Updates with response from Emirates NBD, adds stock reaction)
By Ira Dugal and Aftab Ahmed
MUMBAI, April 13 (Reuters) - The Reserve Bank of India
(RBI) has begun evaluating at least five potential bidders
interested in picking up a majority stake in state-owned IDBI
Bank Ltd IDBI.NS , three people familiar with the matter told
Reuters.
Kotak Mahindra Bank KTKM.NS , Prem Watsa-backed CSB Bank
CSBB.NS and Emirates NBD ENBD.DU are among those that have
submitted expressions of interest, two of the people said,
speaking on condition of anonymity because the talks are
confidential.
Reuters was unable to confirm the names of the other
potential bidders.
The RBI, Finance Ministry, IDBI, Kotak Mahindra Bank, CSB
Bank did not respond to requests for comment. A spokesperson for
Emirates Bank declined to comment.
The stake sale in the lender is the first major divestment
across state-owned banks as part of a broader privatisation plan
and could fetch the government 300 billion Indian rupees ($3.66
billion) at the current market valuation.
The federal government owns 45.48% of IDBI Bank, and is
looking to divest a 30.48% stake in the lender, alongside
state-owned Life Insurance Corp of India (LIC) LIFI.NS , which
will sell 30.24% from its 49.24% holding in the bank.
Expressions of interest - the first step in the stake sale
process - closed in January, the three people said.
The potential bidders have since begun due diligence on the
bank, according to the people, who added financial bids were
likely to be placed later this year.
The RBI is also conducting a "fit and proper evaluation",
including extensive background and financial checks on the
potential buyers, a crucial step before an investor is allowed
to pick up a stake in a local bank, the people added.
Potential investors have raised questions around the extent
of government control in IDBI Bank after the divestment since it
will retain a 15% stake and LIC, a government company, will have
a 19% stake, two of the people said.
"The government does not intend to have any management
control," one of the people said. "The government will take a
call if a written submission to that effect is needed."
Buyers with an existing bank might be required to merge the
operation with IDBI eventually because RBI regulations do not
allow the same investor to own two banking entities, said Ashvin
Parekh, a management consultant.
A merger would dilute the amount of equity held by the
government and LIC, potentially reducing concerns over
government control, he added.
Shares of IDBI Bank rose 4.5% following Reuters' report
while the benchmark BSE Sensex traded marginally lower.
($1 = 81.9500 Indian rupees)
(Reporting by Ira Dugal and Aftab Ahmed; Editing by Jamie Freed
and Kim Coghill)
((Ira.Dugal@thomsonreuters.com; +91-9833024892;))