Deadline to submit bids for IDBI may be extended to early Jan

Govt hopes to meet ~65,000-cr FY23 disinvestment goal via OFS

The government is likely to extend the deadline for strategic disinvestment of IDBI Bank to early January, a senior government official said on Friday. The last date for submitting an expression of interest (EOI) is December 16.

The deadline could be extended following the requests the Department of Investment and Public Asset Management (DIPAM) received from the transaction advisor, said the official.

According to the current plan, the government expects to invite financial bids for IDBI Bank in the current fiscal year close to March 2023, he said. However, the deal is expected to be closed by the middle of the next fiscal year, as it requires 9-10 months to conclude the transaction.

The government had on October 7 invited bids for privatising IDBI Bank. The Centre said it and LIC would sell a cumulative 60.72 per cent stake in the financial institution.

Meanwhile, the process of another big-ticket disinvestment of Container Corporation of India or Concor will begin from January 2023. The official said the government was aiming to float an EOI by January for inviting bids. The government is aiming to meet its disinvestment target of ~65,000 crore in FY23 by completing its first tranche of proceeds from the sale of Hindustan Zinc (HZL).

DIPAM has so far raised ~62,433 crore from stake sales and dividends. This includes disinvestment receipts of ~28,382 crore. “We are very mindful of value-based disinvestments, rather than chasing targets. We have already raised ~62,000 crore this year, including dividends of ~34,000 crore,” DIPAM Secretary Tuhin Kanta Pandey said at a global policy event organised by Confederation of Indian Industry (CII).

Speaking about central public sector enterprises (CPSES), Pandey said the government wanted them to improve their market cap and return on assets (ROA), among other criteria. He stressed on the need to hive off non-core assets that are not linked to the operating companies’ main lines of business.

Citing disinvestments of Air India and Neelachal Ispat Nigam, he elaborated on the role of asset monetisation, saying it helped trigger the investment cycle, unlock economic potential, and bring the private sector to the forefront. Talking about the disinvestment pipeline going forward, the disinvestment secretary said IDBI Bank, Shipping Corporation of India, and BEML were some of the ongoing transactions that needed to be completed. Sources said the Centre was eyeing on diluting some stakes in Hindustan Zinc offer for sale (OFS), which would help it in meeting the target, as IDBI Bank and Concor divestment was unlikely to be completed this year.

At the current market cap, the government’s stake in HZL is worth nearly ~35,000 crore. However, since the stake sale will happen in tranches, the Centre may get some portion of the expected receipts in the current fiscal year itself.