The data room of IDBI Bank, which is on the block, will be opened to shortlisted bidders by next month and the financial bids are expected by September, according to official sources.
The government has got multiple expressions of interest (EoI) including from banks and these are currently being vetted by the Reserve Bank of India.
In the event of a bank winning the bid to acquire IDBI Bank, both banks will have to merge in the immediate aftermath as per a scheme approved by the RBI. Sources said there won’t be any relaxation in this norm.
Reports suggested that Kotak Mahindra Bank and Fairfax India Holdings (promoter of CSB Bank), which are in the fray for IDBI Bank, want 2-3 years window from the RBI before the eventual merger with IDBI Bank in case they get to acquire the private bank.
“Immediate merger is mandatorily required in case a bank wins the IDBI Bank bid,” an official said.
According to RBI guidelines, in case a bank/promoter of a bank acquires another bank, a merger scheme has to be put forward immediately and the regulator will determine how it will be done.
The IDBI Bank stock closed at `53.34 on the BSE on Tuesday, up 0.53% from the previous closing price. At the current prices, the bank’s market capitalisation is `57,353 crore.
On January 7, the Centre received multiple EoIs from domestic and foreign investors for the 60.72% stake in IDBI Bank, which will go to the successful bidder along with management control. The offer comprises 30.48% from the government and 30.24% from LIC, the current promoter.
The IDBI Bank deal was sweetened for investors with the government, markets regulator Sebi and RBI extending some necessary regulatory forbearance.
In the Preliminary Information Memorandum for EoI, the government had said that “in the event, the Successful Bidder intends to amalgamate IDBI Bank with itself or if the same is required by RBI, the GoI and LIC will vote in favour of any such merger/amalgamation at Board and/or shareholders’ meetings of IDBI Bank, along with such reasonable assistance as GoI may in its absolute discretion deem fit.”
Currently, the RBI is undertaking the “fit-and-proper assessment” of the bidders.
After RBI clearance, the sources said qualified bidders would be given access to the data room of the bank by June. Financial bids would be called by September to ensure that the deal is concluded as early as possible in the current fiscal.