The Government of India and the Life Insurance Corporation of India (LIC) will be diluting a 60.72% stake in IDBI Bank

Announcing the sale, the Department of Investment and Public Asset Management (DIPAM) has invited Expression of Interest (EoIs) from potential bidders.

The last date for submission of EoI is 16 December 2022.

Currently, the state-backed life insurer holds 5.2 billion shares representing a 49.24% stake in IDBI Bank, while the Government of India (GOI) owns 4.88 billion shares or a 45.48% stake.

Of this, LIC will sell a 30.24% stake while the Indian government will offload a 30.48% stake, adding up to 60.72% of the equity share capital of IDBI Bank. 

The divesture also includes the transfer of management control in the lender IDBI Bank, DIPAM said. 

IDBI Bank is a full-service bank that caters to customers from all segments.

In January 2019, the LIC became the majority shareholder in the bank by acquiring a 51% stake.

Consequently, the bank was categorised as a private-sector bank by the Reserve Bank of India, the country’s central bank.

In December 2020, the lender was reclassified as an associate company following the reduction of LIC’s stake in the bank to 49.24%.

As per the Economic Times report, earlier, LIC Chairman MR Kumar had expressed the desire to retain some stake in IDBI Bank to reap the benefits of the bancassurance partnership.

“Going forward, we would like to have some stake in IDBI Bank. The whole idea of us picking up stake in the bank was strategic in nature and that has not gone away at all,” the publication quoted Kumar as saying, citing PTI.

In August this year, media reports said that the GoI is in talks with buyout funds and financial institutions such as the Carlyle Group, TPG Capital and Fairfax Holdings for the sale of the stake.

The global private equity investors could partner with local investors for bidding entities, or they could also partner with other investors to form a consortium, the report said.