IDBI Bank privatisation process on; decision on quantum of dilution after roadshow: DIPAM Secretary

IDBI Bank’s privatisation process is on and the quantum of stake sale will be decided after the roadshow is complete, Department of Investment and Public Asset Management (DIPAM) Secretary Tuhin Kanta Pandey said on Friday.

The preparation for privatisation of IDBI Bank is going on, he said during a media interaction at the LIC IPO briefing.

“The quantum of exit will be known post roadshow and then the structure of EoI will be finalised. One thing is very sure that management control will be passed on. Currently, it is with LIC. But, management control at what level of equity will have to be decided when we have decided the structure of EoI,” he said.

The government may decide to sell its entire stake in one go or in tranches, depending on the investors’ response. The government holds a 45.48% stake in the bank, while LIC holds a 49.24% stake.

The Cabinet Committee on Economic Affairs had given in-principle approval for strategic disinvestment and transfer of management control in IDBI Bank in May last year.

Necessary amendments to the IDBI Bank Act have already been made through the Finance Act 2021, and transaction advisors have been appointed.

IDBI Bank became a subsidiary of LIC with effect from January 21, 2019, following the acquisition of an additional 8,27,590,885 equity shares.

On December 19, 2020, the lender was reclassified as an associate company due to the reduction of LIC shareholding to 49.24%, following the issuance of additional equity shares by the bank under Qualified Institutional Placement (QIP).

Talking about LIC’s initial public offering (IPO), Mr. Pandey said the listing of LIC is a part of the long term strategic vision of the government.

Defending the reduction of LIC IPO size to 3.5% from 5% earlier, he said it is the right size considering the capital market environment and expects significant retail participation in one of the most valuable corporations in India.

Even after the reduced size of about ₹20,557 crore, LIC IPO is going to be the biggest initial public offering ever in the country.

So far, the amount mobilised from the IPO of Paytm in 2021 was the largest ever at ₹18,300 crore, followed by Coal India (2010) at nearly ₹15,500 crore and Reliance Power (2008) at 11,700 crore.

In February, the government had planned to sell a 5% stake in the company.

LIC has fixed the price band at ₹902-949 per equity share for the issue. The share sale is through an offer-for-sale (OFS) of up to 22.13 crore equity shares and will open on May 4 and close on May 9. The shares are likely to be listed on May 17.

The offer includes a reservation for eligible employees and eligible policyholders. The retail investors and eligible employees will get a discount of Rs 45 per equity share and policyholders will get a discount of ₹60 per equity share.

LIC was formed by merging and nationalising as many as 245 private life insurance companies on September 1, 1956, with an initial capital of Rs 5 crore.

Its individual product portfolio comprises 32 individual products (16 participating products and 16 non-participating products) and seven individual optional rider benefits. The insurer’s group product portfolio comprises 11 group products.

As of December 2021, LIC had a market share of 61.6% in terms of premiums or GWP, 61.4% in terms of new business premium, 71.8% in terms of the number of individual policies issued, and 88.8% in terms of the number of group policies issued. PTI JD DP DP BAL BAL