IDBI Bank Stake Sale Nears Final Stage As Govt Evaluates Revised Bids

India's long-delayed plan to privatise IDBI Bank has moved closer to completion after revised financial offers were submitted by Canada's Fairfax Financial Holdings and Dubai-based Emirates NBD.

The government is evaluating the fresh bids, with the sale process expected to conclude within about a month, Reuters reported citing government sources.

The Centre and state-owned Life Insurance Corporation of India (LIC) are jointly selling a 60.7% stake in IDBI Bank. The government currently holds 45.48% in the lender, while LIC owns 49.24%.

Shares of IDBI Bank peaked at ₹88.12 at 11:55 am, rising over 3% during Tuesday's trade following reports of progress in the divestment process.

Fairfax Seen as Leading Contender

Fairfax has emerged as the frontrunner to acquire the controlling stake in IDBI Bank after revising its financial offer.

The Canadian insurer is considering increasing its bid by a few rupees per share after its earlier offer failed to meet the government's reserve price, as per a report by Bloomberg (BBG).

The revised proposal is now close to being accepted, although final approval from the Union Cabinet and the Reserve Bank of India (RBI) will still be required.

At current market prices, the acquisition of a 60.7% stake would be worth around $5.7 billion, making it one of the largest foreign investments in India's banking sector, as per BBG.

Sale Revived After Earlier Bids Fell Short

The latest development follows the government's decision earlier this year to halt the transaction after initial bids did not meet its valuation expectations. The sale process was restarted this month after the earlier round was shelved.

Finance Minister Nirmala Sitharaman had said in April that the government remained committed to completing the divestment.

In May, the authorities were examining ways to revive the privatisation, including the possibility of reducing the reserve price by as much as 20% after prospective buyers balked at the previous valuation, as per BBG.

Officials were also reportedly exploring pricing mechanisms that better reflected the bank's intrinsic value rather than relying heavily on prevailing market prices.

A Long-Awaited Privatisation

The strategic sale process began in 2022 as part of the government's broader disinvestment programme aimed at reducing state ownership in the banking sector.

Once weighed down by a large stock of bad loans, IDBI Bank has returned to profitability in recent years following capital support and improvements in asset quality.

Government officials are now assessing the revised offers before taking the next step in what could become one of India's most significant bank privatisation deals.

Besides Fairfax, Emirates NBD reportedly remains in contention after submitting a revised bid. Both the firms emerged as the key contenders after Kotak Mahindra Bank, despite initially expressing interest and receiving regulatory clearance, chose not to submit a financial bid over valuation concerns.