[ad_1]
The government and state-owned insurer LIC, who will continue to hold significant shareholding in IDBI Bank after its privatisation, will not veto any proposals of the new owner as part of their plan to give the incoming promoters a free hand, a senior official said.
The government earlier this month invited bids for the sale of 60.72 per cent stake in IDBI Bank, which is 45.48 per cent owned by the government and 49.24 per cent by the Life Insurance Corporation of India (LIC).
At Friday’s closing price of Rs 44.30, IDBI Bank is valued at Rs 47,633 crore but the government is looking for at least 30 per cent markup in the sale. At the current price, the sale of 61 per cent stake would fetch about Rs 29,000 crore to the government.
The official said post-privatisation, the government and LIC shareholding will come down to 34 per cent but they do not intend to move in tandem to block any special resolution proposed by the new promoter. This is with a view to assuaging the concerns of investors.
Also read: LIC, central govt to divest 60.72% stake in IDBI Bank
“There should not be any such concern. If we are selling a 60.72 per cent stake and transferring management control, it should be clear to investors that we are not interested in controlling the institution and hence will not oppose any resolution,” the official said. “We will give an assurance on this at the RFP or financial bids stage to the qualified bidders for IDBI Bank,” the official told PTI.
There have been concerns in some quarters that the government and LIC holding 34 per cent stake in IDBI Bank after its privatisation may act as a deterrent for bidders as a shareholder or a group of shareholders together holding 25 per cent or more of the shares can effectively oppose a special resolution. Allaying such a concern, the official said “if that was the intent, then we would not have gone ahead with selling about 61 per cent stake. We could have sold less. The government and LIC would not act together in opposing any resolution and we will clarify that in writing in the share purchase pact.”
Also read: IDBI Bank forays into ONDC to help MSMEs set up their digital stores
Decisions like share buyback, loans and investments by company, removal of auditor before time and reduction in share capital require to be approved by a special resolution, with at least 75 per cent of shareholders voting in favour. While inviting the expression of interest (EoI), the government already clarified that if the successful bidder intends to amalgamate IDBI Bank with itself or if the same is required by RBI, the Centre and LIC will vote in favour of any such merger/ amalgamation at the board and/or shareholders’ meetings of IDBI Bank
[ad_2]