Synopsis: IDBI Bank's disinvestment process has progressed as potential buyers, including Fairfax Financial, Emirates NBD, Oaktree Capital, and Kotak Mahindra Bank, have commenced due diligence with access to confidential data.
The Indian government's strategic disinvestment of IDBI Bank has entered a critical phase, with prospective buyers initiating due diligence.
This move is part of a broader effort to privatize public sector banks and attract private investment.
Due Diligence Process:
After a 12-month evaluation period, potential bidders have been granted access to IDBI Bank's confidential data.
This includes information on the bank's top 20 borrowers, exposure, provisioning, and non-performing assets.
The due diligence window is expected to close by the end of February, with bidders anticipated to submit their financial bids subsequently.
Financial Performance:
Since its exit from the Reserve Bank of India's prompt corrective action framework in 2020-21, IDBI Bank has demonstrated a remarkable turnaround:
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Deposits: Increased from ₹2,33,134 crore in FY22 to ₹2,77,657 crore in FY24.
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Net Advances: Rose from ₹1,45,772 crore to ₹1,88,621 crore during the same period.
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Profit After Tax: More than doubled from ₹2,439 crore to ₹5,634 crore.
Disinvestment Details:
The Indian government and LIC collectively hold a 95% stake in IDBI Bank and plan to sell 60.72%. The disinvestment process includes:
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Data Room Access: Bidders have been provided with access to a data room containing material non-public information.
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Share Purchase Agreement: Following due diligence, a draft agreement will be shared with prospective bidders.
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Financial Bids: Bidders will submit their financial offers, with a reserve price set prior to bid opening.
Conclusion:
The disinvestment of IDBI Bank is advancing, with due diligence underway and financial bids expected soon.
This strategic move aims to enhance the bank's efficiency and attract private investment, contributing to the broader objective of privatizing public sector banks in India.
Disclaimer:
This article is for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.
