Govt ready to bring IDBI Bank stake to un­der 50pc: Arun Jait­ley

The Pak Banker - - BUSINESS -

MUM­BAI: In a step that in­di­cated an open­ness to pri­va­tiz­ing state-owned banks, Union fi­nance min­is­ter Arun Jait­ley on Mon­day said the govern­ment is com­mit­ted to re­duc­ing its stake in IDBI Bank to un­der 50%. Jait­ley's com­ment was part of the Union bud­get an­nounce­ments deal­ing with bank­ing sec­tor re­forms. The govern­ment di­rectly owned a 76.5% stake in IDBI Bank as of Septem­ber. It held an ad­di­tional 13.88% through pub­lic sec­tor en­ti­ties such as Life In­sur­ance Corp. of In­dia.

The an­nounce­ment was fol­lowed by the IDBI Bank stock ris­ing over 8%. At 12.12pm, the bank's stock was trad­ing at Rs.60.15 on BSE, up 8.09% from its pre­vi­ous close. The move will come as a pleas­ant sur­prise to most in­vestors who are look­ing to in­vest in the bank's qual­i­fied in­sti­tu­tional place­ment (QIP) of­fer.

Ear­lier this month, mar­kets reg­u­la­tor Se­cu­ri­ties and Ex­changes Board of In­dia (Sebi) gave its nod for IDBI Bank to raise Rs.3,771 crore through the QIP route. A QIP of­fer is a sale of se­cu­ri­ties to in­sti­tu­tional in­vestors by listed firms.

On 31 De­cem­ber, IDBI Bank in­formed stock ex­changes that the govern­ment had ap­proved its plan to raise Rs.3,771 crore through a QIP. In Jan­uary, the bank hired Citibank, HSBC, Credit Suisse, Deutsche Bank, SBI Cap­i­tal, Bank of Amer­ica and its own in­vest­ment bank­ing arm IDBI Cap­i­tal to man­age the fund rais­ing.

The bank, how­ever, has not an­nounced any time­line for the launch of the QIP. IDBI Bank had held in­vestor road­shows be­tween 14 Jan­uary and 25 Jan­uary to gauge for­eign in­vestor sen­ti­ment to­wards the pro­posed QIP. Mer­chant bankers rep­re­sent­ing the state-owned bank met some "large and mean­ing­ful" for­eign in­sti­tu­tional in­vestors (FIIs) in the US, Europe and Asia, Mint re­ported on 28 Jan­uary.

Dur­ing the road­shows, in­vestors sought clar­ity on how much stake the govern­ment would even­tu­ally hold and whether the bank would ac­tu­ally func­tion like a pri­vate len­der.

"In­vestors have sought clar­ity on the govern­ment's stand on own­er­ship of the bank, whether the govern­ment would like to hold 51% stake in the bank or lower. This is im­por­tant to the in­vestors as they want to un­der­stand if the bank will be al­lowed to op­er­ate as a pri­vate len­der," a banker in­volved in the road­shows had told Mint ear­lier.

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