Government May Opt For Public Offer To Reduce IDBI Bank Stake
IDBI Bank’s proposed QIP issue receives lukewarm interest from investors.
With IDBI Bank’s proposed Qualified Institutional Placement (QIP) issue receiving lukewarm interest from investors, the government is now considering other options including follow-on public offer and strategic sale to reduce its stake in the lender.
QIP is not the only route that can be used in this case, sources in the finance ministry told PTI. Initially, some investors had shown an interest in a QIP, but that seems to have scaled back now, they added.
The government is looking at options like follow-on public offer and strategic sale, the same sources said. Some global lenders, including IFC, had concluded due diligence ahead of the proposed QIP but nothing materialised, sources added. As per norms, a QIP issue requires at least five investors.
The government in December gave approval to IDBI Bank for raising Rs 3,771 crore during the year by way of QIP to dilute its holding by about 26 percent. The government’s holding in the bank stands at 73.98 percent. As per existing norms, the government equity in a public sector bank cannot go below 52 percent to maintain the character of a state-owned bank.
Finance Minister Arun Jaitley had last year indicated a change in the characteristics of IDBI Bank wherein government would have a majority stake, but at the same time maintain an arm’s-length distance.
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