Capital markets regulator SEBI has allowed the Central Government to classify its stake in IDBI Bank as “public” after its stake sale on condition that its voting rights do not exceed 15%, of the total voting rights of the bank, the lender said in a regulatory filing on Thursday.
At present, the government is classified as a co-promoter of the lender.
Further, the Securities and Exchange Board of India (SEBI) has also directed the new buyer to comply with minimum public shareholding norms within one year of the sale, the lender said.
“The intention of GoI to get its shareholding re-classied as public holding shall be specified in the letter of offer dispatched to the shareholders of ODBI Bank in connection with the open offer made by the new acquirer,” the bank said.
Post the selloff, IDBI Bank will make an application to the stock exchanges for reclassification of the government holding under public category.
The last date for submitting expressions of interest for IDBI Bank is Saturday. Once the government receives initial bids expressing interest from buyers, the Reserve Bank of India (RBI) would vet them to see if they meet the central bank’s “fit and proper” criteria.
The government and state-run Life Insurance Corp (LIC) together hold about 95% in IDBI Bank, and have sought initial bids from investors to buy a 60.72% in the bank to a private entity and hand over management control of the bank to the winning bidder after the disinvestment process ends.
The government is expecting several bids for the lender. Earlier, Mint had reported that global private equity giants such as the US-based Carlyle Group, Canadian billionaire investor Prem Watsa-controlled Fairfax Financial Holdings and global banks such as Singapore-based DBS Bank, may bid for the stake sale.
Sumitomo Mitsui Financial Group and another global bank were among five potential investors that have sought information from the Centre about the stake sale, as per a report in The Economic Times.
The government had earlier allowed foreign funds and investment vehicles incorporated outside India to own over 51% of IDBI Bank. The Centre has also stated that it may consider relaxing the five-year lock-in period for shares if a non-banking financial company or NBFC is merged into IDBI Bank.
Further, norms that apply to public sector banks will not apply to IDBI Bank after the government and LIC sell their stakes, even though they together will continue to hold about 33% in the bank.
The government has also said that IDBI Bank will operate as a private sector bank even if it were to be taken over by a foreign bank.
On Thursday, shares of IDBI Bank Ltd settled 0.37% higher at ₹54.85 apiece over the previous close on the NSE.
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