IDBI sale likely to conclude at 7-10 percent premium

As the IDBI Bank privatisation enters the next stage, it may end up being one of the most profitable divestment processes for the government in recent years. Interested bidders are willing to offer a 7-10 per cent premium for controlling interest in the bank, which works out to a valuation of ₹64,000-66,000 crore.

Highly placed sources say that with the market regulator, SEBI, allowing the government’s request to classify its shares as “public holdings” post divestment, it has increased the willingness of investors to pay top dollars to take the promoter’s seat at the bank. “A major roadblock with respect to valuations and the deal has been cleared,” said a person aware of the matter.

It is learnt from multiple sources that nearly 4–5 large investors, a motley of banks and private equity players, have submitted their expressions of interest (EOI) to the Department of Investment and Public Asset Management (DIPAM) to collectively pick up a 60.72 per cent stake in IDBI Bank.

These include consortiums led by Fairfax Financial Holdings, Middle East-based Emirates NBD, and Japan’s Sumitomo Mitsui Banking Group. The interested investors are likely to submit their final bid by March, after which the reserve price for the transaction will be fixed.

“When DIPAM conducted roadshows in April last year, it was looking at closing the deal at just about the then-prevailing market price, which was around ₹40–45 a share,” said a person aware of the matter.