There are several stages of the privatisation process which take a lot of time to conclude. Experts and the participants in the bid of sale of IDBI Bank estimate about 50-52 weeks’ time to be required to complete the process.
This was disclosed during a presentation held recently before the Department of Investment and Public Asset Management (DIPAM). However, the Government intends to complete the transaction during the current fiscal itself. Thus, the merchant banker has to find a buyer in about 26 weeks or six months.
The Central Government had given in-principle approval for IDBI Bank's strategic disinvestment along with the transfer of management control in May this year.
The Central Government and LIC together own more than 94 percent equity of IDBI Bank. LIC, currently having management control, has 49.24 percent stake, while the government holds 45.48 percent. non-promoter shareholding stands at 5.28 percent.
DIPAM on behalf of the Government of India had floated a tender in June 2021, inviting bids from transaction advisors from reputed professional consulting firms or investment bankers or merchant bankers or financial institutions for facilitating and assisting strategy. disinvestment of IDBI Bank. The last date for submission of bids was 13 July 2021.
As many as seven bids were received. They are, (1) Deloitte Touche Tohmatsu India LLP, (2) Ernst and Young LLP, (3) ICICI Securities Ltd., (4) JM Financial Ltd., (5) KPMG, (6) RBSA Capital Advisors LLP and (7) SBI Capital Markets Ltd.
The transaction advisor would be required to advise and assist the Government on modalities of disinvestment and the timing, recommend the need for other intermediaries required for the process of sale/ disinvestment and also help in identification and selection of the same with proper Terms of Reference.
The transaction advisor will also assist in the preparation of all documents like Preliminary Information Memorandum (PIM), organise roadshows to generate interest among the prospective buyers and suggest measures to fetch the optimum value.
The advisor would also be supporting IDBI Bank in setting up an e-data room and assisting in the smooth conduct of the due diligence process.
As per the eligibility criteria outlined in the RFP, the bidders should have advised at least one transaction of strategic disinvestment/ strategic sale/ M&A activities/ private equity investment transaction of the size of Rs. 5,000 crore or more during the period from April 2016 to March 2021.
The extent of shareholding to be divested by the Central Government and LIC shall be decided at the time of structuring of transaction in consultation with the Reserve Bank of India (RBI), the Government had earlier said.
Insurance giant LIC had acquired a controlling stake in IDBI Bank in January 2019. Finance minister Nirmala Sitharaman in her Budget for 2021-22 had said the process of privatisation 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 privatisation. Rs. 1 lakh crore is to come from selling government stake in public sector banks and financial institutions, and Rs. 75,000 crore through CPSE disinvestment receipts.
Comentarios