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The government’s divestment of stake in IDBI Bank is likely to have received at least four expressions of interest, two people in the know said on conditions of anonymity.
According to the two people, Emirates NBD, Sumitomo Mitsui Banking Corporation and Prem Watsa’s Fairfax Financial are likely to have submitted EOIs. A domestic non-bank finance company is also likely in the list of prospective bidders, these people said.
Emirates NBD is the largest lender of the Middle East and North African region. While Fairfax currently owns controlling stake in CSB Bank, the government is not opposed to the Canadian investor buying into IDBI Bank, the first of the two people quoted above said.
The list of potential bidders is not exhaustive and may see changes, depending on the quality of EOIs submitted, the people added.
The deadline for submitting electronic EOIs passed on Saturday. Potential bidders may also later choose to form a consortium, rather than submitting individual bids, the people quoted above said.
Prospective bidders are expected to submit physical EOIs by Jan 14, according to the process laid out by the Department of Investment and Public Asset Management of the government.
According to the first person, once the list of prospective bidders is finalised, the government will provide time to submit formal bids, which is the second stage of the process.
The RBI’s fit and proper checks are also an important part of the stake sale process. Queries mailed to Emirates NBD, Fairfax and the government remained unanswered, a representative for Sumitomo Mitsui Banking Corporation could not be immediately contacted.
The government and Life Insurance Corp. of India have placed 60.72% stake in IDBI Bank on sale, under this process.
While consortia with majority foreign ownership have been allowed to submit bids for IDBI Bank, the Securities and Exchanges Board of India last week allowed government stake in IDBI Bank to be classified as public shareholding after the sale is concluded. These were part of important clarifications sought by potential investors for the IDBI Bank stake sale process.
In the quarter ended September, IDBI Bank reported a net profit of Rs 828 crore, up 46% year-on-year. The bank’s operating profit rose 64% to Rs 2,208 crore. It had a loan book of Rs 1.47 lakh crore, where 65% of the assets were non-corporate.
Gross non-performing asset ratio stood at 16.51%, down 339 basis points sequentially, while net NPA ratio stood at 1.15%, indicating a strong provisioning buffer.
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