Further sweetening the deal for prospective buyers of IDBI Bank, the Securities and Exchange Board of India (SEBI), on the government’s insistence, gave its nod for the reclassification of the Centre's shareholding as "public" following its stake sale, a regulatory filing said.
The update saw shares of IDBI Bank zoom over 3 percent to Rs 57 apiece on BSE as of 10.30 am on January 6. Amid stake sale buzz, the stock has delivered 83.74 percent returns in the last year.
The government, along with the state-run Life Insurance Corporation of India (LIC), will sell a 60.72 percent stake in IDBI Bank. The government will offload 30.48 percent of the stake and the remaining 30.24 percent will be sold by the LIC.
The government holds over 45 percent stake in the bank, which will be reduced to 15 percent after divestment.
SEBI granted permission for reclassification on the condition that the government's voting rights would be capped at 15 percent.
The Department of Investment and Public Asset Management (DIPAM), which is the nodal agency for divestments, has said the government will not take any role in the day-to-day running of the bank.
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DIPAM, apart from seeking the reclassification of the government's stake in IDBI Bank, asked the regulatory body to treat the residual holding, after the stake sale, as a "financial investment" since the government would "not exercise any control over the affairs of the bank".
These assurances will be favoured by acquirers who will have complete control over the bank as far as operational control is concerned, analysts said.
There is not much analyst coverage on the stock. Only analyst covering the counter – Anand Rathi – has a “sell” rating on the stock, Bloomberg data shows. The analyst has a target price of Rs 42 on the stock.
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