IDBI Bank disinvestment nears final approval stage, say government sources

The strategic disinvestment of IDBI Bank has entered its final approval phase, with the Share Purchase Agreement (SPA) receiving clearance from the Inter-Ministerial Group (IMG), senior government sources told Business Today TV.

“The IMG held two meetings and has recently approved the Share Purchase Agreement. It will now be taken up by the Core Group of Secretaries on Disinvestment. Following that, financial bids are expected to be invited, likely in the first week of September,” a senior official confirmed.

A Share Purchase Agreement is a legally binding document that outlines the terms and conditions under which shares of a company will be transferred from the seller to the buyer. In disinvestment deals like this, the SPA plays a crucial role in protecting the interests of both parties and defining key clauses such as pricing, representations, and liabilities.

Once the SPA clears the final level of approval, the financial bidding process will formally begin. A reserve price for the sale will be determined, though it will remain confidential and undisclosed to the bidders.

According to sources, a minor delay occurred earlier due to clarifications sought by the three shortlisted bidders on the draft SPA. However, the government remains optimistic that the rest of the process will proceed smoothly. The Expressions of Interest (EoIs) from potential buyers were originally submitted in January 2024.

Despite ongoing market volatility, officials remain confident that such “cyclical issues” will not hamper the disinvestment timeline. The government is targeting to conclude the stake sale within the current financial year and expects to mobilize between Rs 40,000 crore and Rs 50,000 crore through the transaction.

The stake sale, which has faced repeated delays over the past three years, is seen as a crucial component of the Centre’s broader divestment strategy. While earlier years included fixed disinvestment targets, the government has now shifted away from rigid goals.

Currently, the Union government and the Life Insurance Corporation of India (LIC) together own 95% of IDBI Bank. Of this, a 60.72% stake is up for sale through the ongoing disinvestment process.