The government, which owns a 45.48% stake in IDBI Bank, is looking to divest 30.48%. State-run Life Insurance Corporation of India, another shareholder of the bank with 49.24%, plans to sell 30.24%.
At Wednesday’s share price on the BSE, the sale of 30.48% stake in IDBI Bank could fetch the government over ₹31,700 crore.
DIPAM had last year declared that the IDBI Bank strategic sale has drawn interests from multiple players but didn’t name them.Once the potential bidders are declared fit and proper by the Reserve Bank of India, they will be allowed to enter the virtual data room for exclusive details about the state-run lender to start their due diligence. The share purchase agreement and related issues will also have to be sorted out before the government invites the financial bids from the bidders.”All these things take a considerable amount of time but we hope to conclude the transaction this fiscal,” said Pandey.
Value creation approach
He said the government has, in recent years, sought greater accountability from state-run firms-the way a majority shareholder would demand from a company. This has contributed to the spike in their profitability and stock market performance, he said.
There will be greater focus on the growth strategy of central public sector enterprises (CPSEs). “Their performance is being watched more carefully, in terms of profitability, return on capital, completion of projects, capex planning, regular dividend, etc.,” he said.
Another decision is that wherever buybacks are possible, the CPSEs can explore it, he said.
Buyback is essentially the repurchase by a company of its shares from the existing shareholders that reduces the number of its shares in the open market.
For CPSEs, buyback is a tool for the government to disinvest its stake and to make proper utilisation of idle cash left with them.
In a rare move, the interim budget for FY25 clubbed the disinvestment and asset monetisation targets, instead of declaring them separately.
