The other players that also sought information through the query process include a non-bank finance company (NBFC) and global investment firms, sources said.
To be sure, there is no certainty that Sumitomo Mitsui Financial Group or any of the others that sought information will bid for IDBI Bank, the people cautioned.
IDBI Bank’s sale process kicked off when a preliminary information memorandum was issued by the finance ministry on October 7. The government of India and
() are jointly selling 60.72% equity in the bank.
Informal Queries Raised in April
The deadline for submission of expressions of interest (EoIs), or initial bids, is December 16.
Queries had also been raised through an informal mechanism by potential bidders for the bank in April when the government held roadshows to market the transaction. Virtual roadshows in April were followed by another round of physical roadshows in the US.
“There has been a significant amount of interest from global systemically important banks in IDBI Bank. It is expected that at least 2-3 banks will be competing through the bidding process. This shows the inherent strength of the bank, which is expected to translate into a higher valuation as the stake sale process commences,” said an official aware of the matter.
Answers to the queries from parties that sought information about the bank’s sale were published by the finance ministry on Sunday. The names of the parties were concealed.
The government has clarified that norms applicable to public sector banks will not apply to IDBI Bank once the government and LIC divest stakes. It has also stated that IDBI Bank will operate as a private sector bank even if it were to be taken over by a foreign entity.
The Centre also disclosed that it has applied for reclassification of its shareholding as a public shareholder. At present, the government and LIC hold more than 94% stake in the bank. Both are classified as promoter shareholders.
Minimum public shareholding norms (MPS) imposed by capital market regulator securities and exchange board of India (Sebi) require a listed company to have minimum public ownership of 25%. IDBI Bank was exempted from following those norms because of its government ownership. However, potential bidders raised concerns about compliance with the norms after eventual change of control at the bank.
Investors have sought clarification on aspects such as freedom to appoint directors and freedom to reorganise the company and its subsidiaries.
Sumitomo Mitsui Financial Group is present in India through its subsidiary Sumitomo Mitsui Banking Corporation, which has a bank licence here. It also owns a majority stake in Fullerton India Credit Company, a non-bank finance company. It had purchased the stake from Temasek in a deal estimated at over $2 billion in July 2021.
