Department of investment and public asset management (DIPAM) has clarified that government and LIC of India intend to sell their full stakes, with an open offer also possible as per Sebi guidelines, but the quantum of stake will be decided before the request for proposal stage.
“In the instant transaction there will be divestment of GoI and LIC shareholding in
along with transfer of management control. The open offer can be triggered as per SEBI’s regulations in this regard,” the department said Friday in response to queries from potential bidders.
The mandate received from Cabinet Committee on Economic Affairs is to off-load upto 100 per cent stake of government and LIC along with transfer of management control, the department said.
“It (stake to be sold) will be determined, as we go through the transaction and ascertain investors’ interest, market appetite etc. It is clarified that LIC’s stake will be sold along with GoI’s shareholding in this transaction,” it added.
It further said that the decision of remaining co-promoters or otherwise would be contingent on the percentage of stake sale.
It extended the deadline for submission by transaction advisors for strategic divestment of IDBI Bank till July 22 from earlier date of July 13.
Government also clarified that bidders for appointment of transaction advisor for strategic divestment of IDBI Bank will not be allowed to bid in consortium, adding that once appointed the advisor will remain for five years.
A quarter of the fee payment to the advisor will be paid at the time of shortlisting of bidders after expression of interest (EoIs) are received. The rest will be paid post completion of the transaction.
The government has kick-started the process of sale of its stake in IDBI Bank, where government shareholding is at 45.48 per cent, LIC of India shareholding is at 49.24 per cent and non-promoter shareholding is at 5.29 per cent.
The DIPAM has barred public sector banks, which cannot participate as bidders for acquisition of IDBI Bank in the transaction process. Subsidiaries of IDBI Bank – IDBI Capital Markets – cannot participate as bidders either for transaction advisors.
The DIPAM has barred a person or company owning more than 50 per cent equity interest in the merchant banker or controlling the merchant bankers from participating in the competitive process for acquisition of IDBI Bank.
In case the interested transaction advisor is a subsidiary of an existing retail bank, they need to provide documentation explaining firewall or Chinese-wall structure to maintain confidentiality and conflict of interest.
The Cabinet Committee on Economic Affairs had given an in-principle approval for the strategic divestment of IDBI Bank in May this year.