The government is looking to sell at least 51% stake in IDBI Bank. Officials of the government and Life Insurance Corporation of India (LIC) are in talks on a stake sale plan. Both the parties together hold 94 per cent stake in IDBI Bank. Even after the sale, both the parties can retain some stake in the bank.
Bloomberg quoted sources as saying that the final decision on the nature of the deal would be taken by a committee of ministers. The government and LIC will assess the interest of the buyers in the bank by the end of September.
In May last year, the Cabinet Committee on Economic Affairs had given in-principle approval for strategic disinvestment and transfer of management control of IDBI Bank. For this, necessary amendments have been made in the IDBI Bank Act.
The government holds 45.48% stake in this bank, while LIC holds 49.24%. While officials of the Finance Ministry and IDBI Bank declined to comment, LIC did not comment on it.
427.7 billion market capitalization:
Shares of IDBI Bank have gained 6.3 per cent in the last 12 months. This increased the bank’s market capitalization to Rs 427.7 billion. On Wednesday, August 24, the bank’s stock rose nearly 5 per cent to Rs 41 in day trading on the BSE. Finally closed at Rs 40.10 with a gain of 2.82 per cent.
Government can hand over control of management:
The government is currently in the process of handing over management control of IDBI Bank along with selling at least some of its stake in IDBI Bank. According to Bloomberg, RBI will allow investors to buy more than 40 per cent stake.
Companies operating under the purview of the central bank have to take permission to buy stake in excess of the prescribed limit. Companies outside its purview can buy only 10-15 per cent stake.
- Relaxation in this limit may increase the number of potential buyers. This can give impetus to the privatization plan of the government.
- The government has set a disinvestment target of Rs 65,000 crore this year. Of this, one-third has been raised from LIC’s IPO.
The post IDBI: Center to sell more than 51% stake in IDBI Bank appeared first on Spotlight 7.
source https://spotlight7.com/business/idbi-center-to-sell-more-than-51-stake-in-idbi-bank/
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