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    We are happy with the EOIs received for IDBI Bank divestment; process to be over in FY24: DIPAM secy

    Synopsis

    “Depending upon different transactions, the due diligence process time is different. In the case iof IDBI Bank also, it will depend much on how the things pan out in the due diligence virtual data room and what additional information is required. Usually it would be three to four months at least.”

    Tuhin Kanta Pandey
    Secretary of the Department of Investment and Public Asset Management (DIPAM), Tuhin Kanta Pandey is responsible for the disinvestments that the government has seen during the recent years, including LIC and Air India.
    "SEBI has allowed post disinvestment, residual equity of 15% of the GOI to be designated as public. Post investment, we do not intend to participate in management control or having a director on the board and so that part is clear. As regarding the LIC’s 19% stake, that is less than 20%. It comes as an associate ownership and that would not be applicable and both LIC and the government would eventually be exiting at appropriate time," says Tuhin Kanta Pandey, DIPAM Secretary.

    The EOI for IDBI Bank divestment has been received. How many EOIs have you received and from here how does the strategic divestment of IDBI moves?
    The transaction adviser has informed us that there has been a good response but we do not actually reveal the names and the number as per our process. Now that we have received the EOIs, there will be qualified and then the process will move to the second stage which includes the fit and proper verification by the Reserve Bank of India as well as a due diligence process under the specific nondisclosure undertaking to a virtual data room, the draft sharing of share purchase agreement and comments and queries looking into the different aspects of information regarding the bank. And then once the bidders are ready go for financial bidding.

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    How many weeks for the step one or phase one, which is examining the fit and proper criteria would be concluded?
    We do not have those specific deadlines regarding the processes but overall I can give you a sense that depending upon different transactions, the due diligence process time is different. In this case also, it will depend much on how the things pan out in the due diligence virtual data room and what additional information is required. Usually it would be three to four months at least.

    For the final process to go through, are we talking months or are we talking about quarters?
    We are talking of months

    Just to clear the air, phase two is unlikely to get completed in FY23?
    That is right. It will go to FY24.

    In terms of a procedural approval what is the next stage once you get the fit and proper indication from the Reserve Bank of India? Do you think the entire process of reserve price and bidding will start pararellely?
    The reserve price fixation takes place after the financial bids have been received.

    What to your mind has been or potentially could be the biggest bottleneck in the IDBI strategic disinvestment sale? Earlier it was Covid, market conditions, war, geopolitical conditions but now things are really falling in place for us. Can I say as of now, barring some global uncertainty in terms of a procedural problem, all decks are cleared?
    That is right.


    Do you think more than anything else IDBI Bank will be more like an important statement by the government because it is not an easy asset to divest? We are looking at a bank which in a sense is very crucial and represents the total commitment of the government towards the disinvestment process?
    Yes, I think it is quite a unique process in that sense that for the first time, we are having a divestment of a bank in a publicly competitive bidding process.

    Before the EOIs were invited, concerns were raised by some interested parties about government ownership, open offer and about the LIC residual stake. What is the status of all that?
    In between there has been developments because of that open offer issue, the prices and pricing that particular issue has been in general resolved for strategic disinvestment processes of the government in terms of SEBI issuing regulations around it.

    That is a generic thing which is applicable for all strategic disinvestment processes of the government and so that part stands resolved.

    The second issue you are mentioning is regarding the residual stake. On our application, SEBI has allowed post disinvestment, residual equity of 15% of the GOI to be designated as public. Post investment, we do not intend to participate in management control or having a director on the board and so that part is clear. As regarding the LIC’s 19% stake, that is less than 20%. It comes as an associate ownership and that would not be applicable and both LIC and the government would eventually be exiting at appropriate time.

    We started with the EOI process going through successfully. Are you happy with the response that you have got, surprised or a tad disappointed?
    No, we have got a good response.

    I will say it again. Are you happy, satisfied or disappointed?
    We are happy.



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    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
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