IDBI Bank Stock Plummets by 13% Amid Reports of Government Scrapping Majority Stake Sale Over Low Price Bids

IDBI Bank Shares Plummet 13.55% as Government Considers Scrapping Privatization Effort

IDBI Bank, a major Indian lender, witnessed a sharp decline in its shares on Monday, following reports that the government may scrap the ongoing strategic sale process due to bids received being below the minimum price expectation. The stock dropped to Rs 79.69 in morning trade, a decrease of 13.55%.

According to reports by Bloomberg and Reuters, the government is likely to scrap the bids received for selling its majority stake in IDBI Bank, as the offers fell short of the reserve price set for the transaction. This development would effectively halt the current sale process. The government and Life Insurance Corporation of India (LIC) had initiated the strategic disinvestment in 2022, aiming to sell around a 60.7% stake in the bank.

The government currently holds a 45.5% equity stake in IDBI Bank, planning to divest 30.5%; while LIC owns 49.2% and plans to offload 30.2%. The stake sale could fetch a combined Rs 66,000 crore, according to reported estimates. Canada-based Fairfax Financial Holdings and Dubai’s Emirates NBD were among the bidders for the stake sale.

Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data

The government may consider launching a fresh sale process later when market conditions improve and stronger investor interest emerges, according to a government source cited by Reuters. Despite the setback in the disinvestment process, IDBI Bank had returned to profitability in recent years after capital support and efforts to reduce non-performing assets. Over the past year, the stock has gained about 9.2%, outperforming the Nifty 50 index, which has risen about 3.4% during the same period.