IDBI Bank to be first off disinvestment block, followed by stake sales in other PSUs in Q4

Mint

3 days ago

New Delhi: The government is likely to defer its broader disinvestment plans to the fourth quarter of FY26 as it focuses on completing the strategic sale of IDBI Bank by the end of the third quarter, two people aware of the matter said.
The move is aimed at avoiding market crowding and ensuring sufficient investor appetite.
The IDBI Bank transaction is expected to fetch about ₹50,000 crore for the central government and Life Insurance Corporation of India, which together hold over 94% in the bank, the people said. The key stakeholders plan to divest a 60.72% stake in the lender.
There has been no major asset monetisation or stake sale in the first quarter and the second quarter could also remain subdued, the first person said.
"While the stake sale in IDBI Bank is likely to fetch about ₹50,000 crore, another ₹10,000-15,000 crore could come from offers for sale of equity in other listed public sector undertakings," the first person added.
The Centre is currently in the final stages of divestment in IDBI Bank. An inter-ministerial group has approved the share purchase agreement detailing the terms of the sale, paving the way for the government to invite financial bids, the second person said, asking not to be identified.
"The proposal will be discussed by the core group of secretaries on disinvestment for clearance, after which financial bids are likely to be invited in September-October, following which financial bids will be invited," the second person added.
The potential suitors for the IDBI Bank stake include Fairfax India Holdings (promoter of CSB Bank), Emirates NBD, and Kotak Mahindra Bank.
Transaction timeline
Both people aware of the stake sale plan said the timeline for the transaction remains broadly on track. The IDBI Bank privatisation plan was first announced in the Union Budget for FY22 but had been delayed multiple times during the past three years.
IDBI Bank shares climbed 2% to ₹97.10 on the BSE as of 10:33 AM on Wednesday, extending this year's gains to about 27%. The lender's market capitalisation exceeds ₹1 trillion.
The Centre stopped setting separate disinvestment targets in FY24. However, the budget estimate for miscellaneous capital receipts (MCR), which includes proceeds from equity sales and public asset management, is pegged at ₹47,000 crore for FY26. For FY25, the receipts were revised to ₹33,000 crore from ₹50,000 crore pegged in the budget estimate.
Mint reported earlier that there were as many as eight strategic disinvestment plans at various stages, including stake sales in BEML Ltd, Shipping Corp. of India Ltd, HLL Lifecare Ltd, Projects & Development India Ltd, and Indian Medicines Pharmaceutical Corp. Ltd.
Little progress has been made on divesting stake in most of these companies and they could be taken up in the coming quarters, depending on market conditions.
'Some of the planned divestments will be taken up once the IDBI Bank sale is completed. That said, the Centre is confident of exceeding the ₹47,000 crore MCR target for FY26, buoyed by the IDBI transaction and other stake sales," the first person said. "Divestment proceeds in FY26 are expected to reach a multi-year high."
The Centre's disinvestment receipts touched a record of over ₹1 trillion crore in FY18, largely due to the stake sale in Hindustan Petroleum Corporation Ltd and the listing of central public sector enterprises. The government sold its entire 51.1% stake in HPCL to Oil and Natural Gas Corporation for ₹36,915 crore.
Disinvestment proceeds stood at ₹84,972 crore in FY19 and ₹50,300 crore in FY20, according to data from the Department of Investment and Public Asset Management.
A finance ministry spokesperson did not respond to an emailed query. Spokespersons for Fairfax India Holdings, Emirates NBD, and Kotak Mahindra Bank did not respond to requests for comment.