Authorities are exploring ways to revive interest from potential buyers after their long-running efforts to divest a majority stake in IDBI Bank Ltd. Which is worth $8 billion, a hurdle, according to people familiar with the matter.
One option is to lower the reserve price by up to 20% after buyers declined in the previous round, which was halted in March, said one of the people, who asked to remain anonymous because details are not public. Efforts are underway to make the deal possible, including setting a price that captures the bank’s intrinsic value and reduces dependence on its stock price, the people said.
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The sources said that the options are still preliminary and subject to change.
The Narendra Modi-led government, which has not announced a minimum reserve rate in the past, has been unsuccessful in selling the Mumbai-based bank for several years, a potential setback for the drive to divest from state-owned enterprises. The successful deal would have represented the largest government-backed sale of a stake in a local bank in years.
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The government canceled bids for IDBI Bank because they did not reach the minimum price, according to people familiar with the matter. Fairfax Financial Holdings Limited, founded by Indian-born Canadian billionaire Prem Watsa, was the front-runner to buy the stake, while Emirates NBD also made a bid, people said.
Officials have also indicated their intention to resume the sale with interested bidders, including Fairfax, one of the people said. IDBI Bank shares are down about 32% this year, a performance lower than the 10% decline in the Nifty Bank index.
The Finance Ministry and IDBI Bank did not respond to requests for comment. Fairfax did not respond to an email inquiry from Bloomberg News.
Indian Finance Minister Nirmala Sitharaman said in April that the authorities would continue the divestment process. The government and state-run Life Insurance Corporation of India together own about 95% of IDBI Bank, and plan to sell a combined stake of 60.7%.
Kotak Mahindra Bank Ltd. was Initially interested in IDBI Bank but did not make an offer as the valuation was too high. The bank had expressed a so-called expression of interest in IDBI Bank and was given appropriate and appropriate criteria by the RBI, but did not submit an offer.
Authorities are evaluating whether additional bidders can be involved in the process, although this may require new “appropriate and appropriate” approvals from the Reserve Bank of India, which could push back timelines, the sources said. So far, a smaller stake sale or a sale route has not been considered, they said.
