India seeks US$7.7 billion value for IDBI Bank stake as Modi struggles to meet target from asset sales
- India’s government has achieved about one-third of its target of raising 650 billion rupees from asset sales to replenish state coffers
- The finance ministry earlier this month invited bids for its 60.72 per cent stake in the Mumbai-based lender
India is pushing for a valuation of around 640 billion rupees (US$7.7 billion) for state-owned IDBI Bank in what could be the biggest sale of the government’s stake in a lender in decades, people familiar with the matter said.
The government earlier this month invited bidders for a 60.72 per cent stake in the Mumbai-listed lender. The valuation target means the administration is seeking a premium of roughly 33 per cent, based on IDBI Bank’s market value of about US$5.8 billion as of Thursday close.
IDBI Bank’s improved profitability could support the valuation target, said the person, who asked not to be identified as the information is confidential. Potential investors ranging from domestic and foreign banks to non-banking financial companies and private equity funds have expressed interest in the asset, the person added.
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Bidders could get regulatory approvals and security clearances after November, according to the person, adding that a sale could be completed as soon as in the next fiscal year starting from April 1. The federal government and the state-owned Life Insurance Corp (LIC) together own about 95 per cent in IDBI Bank.
A spokesperson for the finance ministry declined to comment.
The stock rose 1.7 per cent to 45.70 rupees in Mumbai, trimming its decline this year to 3.7 per cent.
Prime Minister Narendra Modi has committed to divest from most large state-owned businesses to bolster public finances. After years of trying, the government has only been able to privatise national carrier Air India and introduce outside backers to LIC, while its plans to sell refiner Bharat Petroleum hit a wall.