Govt could take into account OFS possibility for elevating public float in IDBI Financial institution
At the moment, the public float in IDBI Financial institution is simply 5.29 per cent, limiting the scope of truthful valuation.
The remaining shares are with insurance coverage behemoth Life Insurance coverage Company of India (LIC), with a controlling stake at 49.24 per cent, whereas the Authorities of India (GoI) holding stood at 45.48 per cent.
Earlier this month, the proposed sale of a 60.72 per cent majority stake, held collectively by the federal government and the LIC, was scrapped after monetary bids from two potential consumers reportedly fell in need of the reserve worth.
Low free float restricts the scope for truthful markvaluation, and increasing this by 10 per cent or 15 per cent would make worth discovery extra dependable, sources mentioned.
It will possibly present a dependable benchmark for valuation and additional make the worth discovery course of clear, they mentioned, including, strategic sale could be pursued even after one or two tranches of OFS.
As per the failed plan, each the federal government and LIC have been to dump 30.48 per cent and 30.24 per cent stake, respectively.That is the second time that the federal government has needed to privatise IDBI Financial institution for the reason that first announcement made in 2016. The thought was first formally flagged within the Union Funds speech by then-Finance Minister Arun Jaitley in February 2016.
The primary try to privatise the then state-owned IDBI Financial institution failed as a result of valuation issues.
Nevertheless, the federal government later bought the controlling stake to LIC, which had been eyeing buying a stake in a financial institution to broaden its bancassurance enterprise mannequin.
Subsequently, in January 2019, LIC acquired a 51 per cent controlling stake in IDBI Financial institution for about Rs 21,624 crore to rescue the lender from heavy dangerous loans as a part of the disinvestment course of.
In consequence, the financial institution was categorised as a private-sector financial institution by the Reserve Financial institution of India.
In December 2020, the lender was reclassified as an affiliate firm following the discount of LIC’s stake within the financial institution to 49.24 per cent.
The method for privatisation gained formal momentum when the Cupboard Committee on Financial Affairs gave its in-principle approval in Could 2021 for strategic disinvestment together with switch of administration management in IDBI Financial institution.
In October 2022, KPMG India was appointed as Transaction Advisor and the intent to promote 60.72 per cent stake within the financial institution was introduced.
The Division of Funding and Public Asset Administration (DIPAM) invited Expressions of Curiosity (EoI) in October 2022, and market regulator Sebi authorized the reclassification of GOI as a public shareholder upon completion of the sale in January 2023.
Later in August 2025, the regulator gave its nod for reclassification of LIC as a public shareholder upon completion of the sale and after a protracted due diligence interval, monetary bids from two Emirates NBD Financial institution and Prem Vatsa-promoted Fairfax India have been lastly acquired in February 2026.
