Government Eyes Stake Sale in IDBI Bank to Boost Public Shareholding

The government is contemplating selling a stake in IDBI Bank via the Offer-for-Sale route to enhance public shareholding. This follows an unsuccessful attempt to divest a 60.72% stake, jointly held with LIC, due to financial bids falling short. Expanding public float could improve fair market valuation.

Sources reveal that the government is considering an Offer-for-Sale (OFS) for IDBI Bank to expand public shareholding, following the failure to divest a stake held with LIC. Currently, a mere 5.29% of public float limits fair valuation, with LIC holding a controlling 49.24% stake and the government at 45.48%.

The proposed sale of a 60.72% majority stake was scrapped due to financial bids falling short. Increasing the public float by 10-15% is seen as crucial to improving reliable price discovery, according to insiders, making valuations more transparent and setting the stage for future strategic sales.

This marks the government's second attempt to privatize IDBI Bank, originally initiated in 2016 by Finance Minister Arun Jaitley. The move towards OFS comes after earlier privatisation efforts and strategic investments by LIC, which took over a controlling stake in 2019 to salvage the bank.

(With inputs from agencies.)