Indian state-owned IDBI Bank confirmed that it has received the final letter from Life Insurance Corporation of India (LIC) for the acquisition of additional 26% stake in the debt-ridden lender.
In October, the insurer made an open offer to purchase the stake for INR126bn ($1.7bn) as a part of the plan to acquire 51% stake in IDBI Bank.
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IDBI Bank acquisition
In a regulatory filing, the lender said that it has received an open letter from the LIC for the acquisition of 2041,512,929 fully paid-up equity shares with a face value of INR10. The open offer has been made at a price of INR61.73 a share.
An open offer by the acquirer is mandatory under regulations mandated by the regulatory body Securities and Exchange Board of India (SEBI). The rule enables the shareholders as well as retailers to monetise their stake in the company.
Among all the state-owned lenders, IDBI Bank is said to have the highest ratio of bad loans, which prompted the government to initiate the divestment.
In August, the union cabinet approved LIC’s planned takeover of IDBI Bank.
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By GlobalDataOverall, the deal will increase LIC’s current stake from current 7.98% to 51% and slash government interest from 80.96% to around 45%.
The deal is expected to provide IDBI Bank with necessary capital to support its operations.
The IDBI Bank acquisition has already been approved by LIC board and the Insurance Regulatory and Development Authority of India.
IDBI Bank has around 2,000 branches and 3,817 ATMs across India.
