The Finance Ministry on Friday denied media reports which claimed that the disinvestment process in IDBI Bank has been deferred and said that the transaction is on track. Mint reported that the government may defer the plan over concerns that the unprecedented market volatility may deter prospective buyers.
Reports appearing in a section of the media indicating the possibility of deferment of IDBI Bank disinvestment are misleading, speculative and baseless. The transaction continues to be on track as per the defined process in post-EoI stage following receipts of multiple EoIs,” Secretary, Department of Investment and Public Asset Management tweeted.
Reports had earlier suggested that the Centre is pushing for a valuation of around Rs 640 billion ($7.7 billion) for state-owned IDBI Bank Ltd. in what could be the biggest sale of the government’s stake in a lender in decades.
The government and LIC together are looking to sell 60.72% in IDBI Bank and had invited bids from potential buyers in October. The last date for submitting EoIs or preliminary bids was initially December 16 but was later extended to January 7. The government and LIC together hold 94.71% in the lender. The successful bidder will have to make an open offer for the acquisition of 5.28% of public shareholding.
JC Flowers, Carlyle Group, Canada-based Fairfax group and Japanese Bank Sumitomo Mitsui are understood to have evinced interest in IDBI Bank during roadshows held by the government for the stake sale. There has been no official confirmation of those that have submitted EoIs.
DIPAM Secy this year had said that the divestment process of IDBI Bank will complete in the fiscal year 2023-24. Calling the process a unique one, Pandey claimed that there is no intention to have management control post divestment. Reserve price fixation will take place after financial bids have been placed, he said.
Pandey said that while the names and the number of bidders for IDBI Bank cannot be revealed as yet, the next stage in the process will be related to giving access to virtual data room and solving queries.
‘Not in a crazy rush’
The government is not in a “crazy rush” to sell everything and it will continue to have a presence in four strategic sectors, including telecom, Finance Minister Nirmala Sitharaman said recently.
Speaking at the Raisina Dialogue, the minister said that the country will have government-owned professionally run companies in four broad strategic sectors.
According to the PSE Policy, the four broad strategic sectors are – atomic energy, space and defence; transport and telecommunication; Power, Petroleum, Coal and other minerals; and Banking, Insurance and Financial Services.
Sitharaman in the latest Budget announced that the government will raise Rs 51,000 crore by selling stakes in various state-run companies in FY24. This is marginally higher than the current year ending on March 31, 2023.
In the last budget, the government intended to raise Rs 65,000 crore through divestments, which was later revised to Rs 50,000 crore. At present, the government is trying to work on the privatisation of a number of central public sector enterprises, such as IDBI Bank, Shipping Corporation of India, NMDC Steel, BEML, HLL Lifecare, Container Corporation of India and Vizag Steel.
Process for disinvestment for these companies have already started and are at different levels, and are expected to be completed in the next fiscal if the target of Rs 51,000 crore is to be met.
The government has missed its disinvestment target for the past four years.