Home Business Centre, LIC to stay away from veto post IDBI Bank privatization

Centre, LIC to stay away from veto post IDBI Bank privatization

LIC and the government hold 49.24 per cent and 45.48 per cent respectively. (Representative)

New Delhi:

A senior official said the government and state-owned insurance company LIC, which will continue to hold significant shareholding in IDBI Bank after its privatization, will not veto any proposal of the new owner as part of its plan to give a free hand to the upcoming promoters. Will do ,

The government had earlier this month invited bids for the sale of 60.72 per cent stake in IDBI Bank, which is 45.48 per cent owned by the government and 49.24 per cent by Life Insurance Corporation of India (LIC).

At Friday’s closing price of Rs 44.30, IDBI Bank is valued at Rs 47,633 crore, but the government is looking for at least a 30 per cent markup in sales.

Selling 61 per cent stake at the current price will fetch the government around Rs 29,000 crore.

The official said the government and LIC’s shareholding will come down to 34 per cent post privatization, but they do not intend to block any specific proposal proposed by the new promoter.

This has been done to address the concerns of investors.

“There should not be any such concerns. If we are selling 60.72 per cent stake and transferring management control, it should be clear to investors that we are not interested in controlling the institution and hence are not interested in controlling the institution,” the official said. Will not oppose the proposal.” ,

“We will give an assurance to the eligible bidders for IDBI Bank at the RFP or financial bid stage,” the official said.

There have been concerns in some quarters that post privatization of IDBI Bank, the government and LIC as shareholders or group of shareholders holding 34 per cent stake may act as a deterrent to bidders who are holding 25 per cent or more. Can effectively hold shares. opposition to special motion

Allaying such concerns, the official said, “Had this been the intention, we would not have gone ahead with selling around 61 per cent stake. We could have sold less. The government and LIC together oppose any proposal.” will not work and we will make that clear in writing in the share purchase agreement.” Decisions such as share buybacks, loans and investments by the company, premature removal of auditors and reduction in share capital need to be approved by a special resolution with at least 75 per cent of the shareholders voting in favor.

Inviting Expression of Interest (EoI), the government has already made it clear that if the successful bidder wishes to amalgamate IDBI Bank with itself or if RBI so requires, the Center and LIC will be liable for any such merger/ Will vote in favor of amalgamation. Meetings of the Board and/or Shareholders of IDBI Bank.

The government expects to receive financial bids for IDBI Bank by March and complete the privatization process in the first half of the next fiscal, starting April 2023.

The government along with LIC offered to sell 60.72 per cent stake in IDBI Bank on October 7 and invited preliminary bids or expression of interest (EoI) from potential buyers by December 16.

LIC and the government hold 49.24 per cent and 45.48 per cent respectively. The remaining 5.28 percent stake is with the public.

Of this, the government will sell 30.48 per cent and LIC will sell 30.24 per cent, which is 60.72 per cent of the equity share capital of IDBI Bank.

In addition, the buyer will have to make an open offer to the minority shareholders of IDBI Bank to buy 5.28 per cent stake.

(Except for the title, this story has not been edited by NDTV staff and is published from a syndicated feed.)


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