Government and LIC to sell 61% stake in IDBI Bank

The Indian government and LIC are set to divest their 60.7% stake in IDBI Bank, with potential deals involving companies from Canada and Dubai.

The Government of India and Life Insurance Corporation (LIC) are preparing to sell their 60.7% stake in IDBI Bank. Under this strategic disinvestment, Canada's Fairfax Financial Holdings and Dubai's Emirates NBD have placed bids. Currently, the valuations of both companies' bids are being assessed. According to government sources, this deal could be finalised within the next month.

The process of stake sale in IDBI Bank is progressing rapidly. According to sources, a panel of senior bureaucrats met on Monday to review this transaction and discuss the next steps. The revised bids from the companies are currently being examined. This proposed deal is a crucial part of the central government's strategic disinvestment programme. As per the current shareholding,

the central government holds a 45.48% stake in IDBI Bank, while LIC holds 49.24% shares. Together, they are selling 60.7% of their combined stake.

There are two major contenders in the race to acquire the controlling stake in IDBI Bank. The first is Fairfax Financial Holdings, a company owned by Canada-based Indian-origin industrialist Prem Watsa, and the second is Dubai's leading banking group Emirates NBD.

Based on the current market value, the total valuation of this proposed acquisition is estimated to be around $5.7 billion. Experts believe that if this deal is completed, it will be among the largest foreign investments in India's banking sector to date.

Government sources told news agency ANI that the valuation process is continuously progressing. Once all necessary formalities are completed, the stake sale is likely to be finalised within the next month. Following this news, IDBI Bank's shares also saw an uptick, closing with a gain of about 3% at ₹86.48 per share.

When the government sells a significant stake, usually 50% or more, in a public sector company or bank to a private or external company and also transfers the management control to the new buyer, it is termed as Strategic Disinvestment. The aim is to increase private investment in public enterprises, make operations more efficient, and reduce the government's stake.