The Department of Investment and Public Asset Management (DIPAM) has announced significant progress in the strategic disinvestment of IDBI Bank, with Secretary Arunish Chawla confirming the appointment of asset valuers and ongoing deliberations on the share purchase agreement.
Key Developments in the IDBI Bank Privatization Process
DIPAM Secretary Arunish Chawla revealed on Wednesday that the government has successfully appointed asset valuers for the valuation of IDBI Bank, marking an important milestone in the privatization process Economic Times.
“We have established a virtual data room. The facility to answer query is going on well and we have appointed an asset valuer. We are also deliberating on shareholder agreement,” Chawla stated Economic Times.
The strategic disinvestment process is “moving ahead as per the decision of the government” and progressing “parallel on several fronts,” according to Chawla Business Today.
Disinvestment Structure and Timeline
The disinvestment involves the sale of a 61% stake in IDBI Bank, with the Centre selling 30.48% and Life Insurance Corporation of India (LIC) selling 30.24% Business Today.
While Chawla declined to provide a definitive timeline for the completion of the transaction, an official indicated that “the strategic sale of IDBI Bank should conclude in another 6-7 months” Economic Times. The transaction is expected to be completed in the first half of FY26, with financial bids to be invited soon CNBCTV18.
The privatization process, which began in January 2023, has seen several developments, including:
- Establishment of a virtual data room
- Responses to bidder queries
- Appointment of asset valuers
- Ongoing deliberations on the share purchase agreement
Current Ownership Structure and Post-Sale Scenario
Currently, the government holds 45.48% stake in IDBI Bank, while LIC holds 49.24% Livemint. Post-disinvestment, the combined holding of the government and LIC will be reduced to 34% (19% by LIC and 15% by the government) Financial Express.
Due Diligence Process
Chawla confirmed that due diligence has been completed, and data-related issues have been resolved CNBCTV18. “The strategic disinvestment of IDBI Bank is moving ahead as per the decision of the government and we are moving parallel on several fronts,” he said Business Today.
IDBI Bank’s Performance and Market Response
IDBI Bank has shown strong financial performance recently, with a 31% year-on-year increase in net profit to ₹1,908 crore for Q3 FY25 Times of India. The bank’s shares rose by over 3% on April 9 following the DIPAM Secretary’s update on the disinvestment progress Nifty Trader.
About DIPAM and the Disinvestment Process
The Department of Investment and Public Asset Management (DIPAM) oversees the government’s disinvestment program and is responsible for the management of Central Government investments in equity DIPAM. The current DIPAM Secretary, Arunish Chawla, is a 1992-batch IAS officer of the Bihar cadre who previously served as Secretary in the Department of Pharmaceuticals and the Department of Revenue PIB.
The disinvestment process typically involves appointing transaction advisors, legal advisors, and asset valuers through tendering, followed by a two-stage bidding process (Expression of Interest/Request for Proposal) DIPAM.
Background on IDBI Bank
Established in 1964 as the Industrial Development Bank of India, IDBI transformed into a commercial bank in 2004. It was reclassified as a private sector lender in January 2019 after LIC acquired a 51% stake in the bank The Kanal.
The privatization of IDBI Bank has been in process for over two and a half years, since October 2022, when the government, together with LIC, initiated the sale of their combined majority stake Money Rediff.
This ongoing disinvestment is part of the government’s broader strategy of strategic disinvestment and privatization of public sector enterprises.
