Indian government begins fresh IDBI Bank valuation – report  

The Indian government has started a new valuation process for IDBI Bank and will decide on the next step in the sale only after this exercise is completed, which is expected to take around a month, according to a senior government official, as reported by Moneycontrol. 

This updated valuation is set to become the reference point for any later stake sale. 

The step comes after the earlier strategic sale process failed to produce the expected result.  

“These are difficult times for the transaction. We are still in the process of valuation and no decision has been taken yet. The fresh valuation itself will take about a month to complete, and only after that will we be in a position to take a call,” the official told Moneycontrol. 

In response, the government is reviewing its price assumptions in a softer market.  

“At this stage, it has not been decided whether fresh expressions of interest will be invited again. That is something we will assess only after the valuation exercise is completed and we have greater clarity on the way forward,” the official said. 

The Centre and Life Insurance Corporation of India (LIC), which jointly own a controlling stake in IDBI Bank, are reworking the proposed transaction with the aim of improving value realisation. 

IDBI Bank’s share price has fallen sharply, dropping from about Rs 118 during the peak of disinvestment-related expectations to the low Rs 70 range after the process slowed.  

Offers from Fairfax India Holdings and Emirates NBD were also reported to be below internal valuation thresholds. 

“The current equity price is also on the lower side, and that has to be factored in. You cannot proceed with a transaction of this nature without aligning expectations on valuation, especially when market conditions are not very supportive,” the official said. 

“The global environment is not very supportive right now. Earlier, there was a lot of hype around the transaction and things were progressing well, but the situation has changed since then,” the official said. 

Sources said the present market price remains a major hurdle to taking the transaction forward. 

The fall in the stock has reduced the government’s flexibility in negotiations and raised the risk that a sale at current levels could weaken returns for public shareholders. 

Officials are now adjusting their approach for the next stage of the process, stepping back from the earlier method that was marked by strong market signalling and a rapid rise in the stock. 

Any renewed effort to sell the stake in IDBI Bank is expected to be handled more cautiously, with attention on limiting speculative movements in the share price and keeping valuations tied to fundamentals. 

The latest valuation exercise points to a wider rethink in the government’s disinvestment plan for the lender. 

“Going ahead, the approach will have to be more measured. We will need to work quietly rather than build expectations too early. That, at this point, appears to be the most appropriate way forward,” the official added.