The setback to the strategic sale comes as financial bids reportedly fell short of the government’s floor price, people familiar with the matter told The Economic Times. If the Centre proceeds with the divestment, it may need to restart the bidding process, one of the sources said.
The stock has now declined over 19% in just two sessions and is nearing its 52-week low of Rs 72 per share. Its market capitalisation stands at around Rs 80,224 crore, down sharply from Rs 99,116 crore on Friday.
The divestment process dates back to May 2021, when the Cabinet Committee on Economic Affairs, chaired by Prime Minister Narendra Modi, granted in-principle approval for the strategic sale of IDBI Bank along with a transfer of management control.
In 2023, the government and Life Insurance Corporation (LIC) decided to offload a little over 30% stake each in the lender. Together, they hold more than 94% in IDBI Bank, with the Centre owning 45.48% and LIC holding 49.24%.
While the government did not officially name the bidders, reports suggest that Prem Watsa’s Fairfax Financial and Emirates NBD submitted financial bids. Earlier in February, Kotak Mahindra Bank clarified that it had not participated in the bidding process.
The proposed sale of a 30.48% stake could fetch the government around Rs 30,215 crore, based on Friday’s closing price. The divestment is part of the Centre’s broader privatisation and asset monetisation strategy, with IDBI Bank seen as a key test case for strategic sales in the banking sector.Any cancellation of the sale could complicate the government’s efforts to meet its FY27 disinvestment and asset monetisation target of Rs 80,000 crore.
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