IDBI Bank Auction: Uday Kotak and Prema Watts Line Up to Buy Stake

New Delhi: The Government of India and Life Insurance Corporation (LIC) are set to sell their combined 60.72% stake in IDBI Bank. Fairfax Financial, led by Prema Watts, and Kotak Mahindra Bank have shown keen interest in acquiring a significant portion of the shares, triggering a competitive bidding process. Both parties are expected to submit their financial proposals separately on Friday. Currently, the government and LIC together hold more than 90% of IDBI Bank’s total stake.

According to sources cited by The Economic Times, once the bids are received, a minimum sale price — or reserve price — will be determined before the offers are opened. This reserve price will be known only to a few government officials and will not be disclosed to the bidders. A government official noted that the reserve price has been set based on a valuation of the bank’s operations and assets, a process that has already been completed. A valuation expert had been appointed to assess the bank’s properties, which include land and buildings accounting for roughly 3% of the total assets.

SEBI to Play Key Role
People familiar with the matter said that the Securities and Exchange Board of India (SEBI)’s open offer pricing mechanism could also be used as a benchmark for deciding the reserve price. The strategic divestment of IDBI Bank began in October 2022 but was delayed due to measures taken by the government to facilitate potential buyers.

Government Targets ₹80,000 Crore Through Disinvestment
The government aims to raise ₹80,000 crore through disinvestment and monetization of assets by FY2027. Post-budget, Arunish Chawla, Secretary of the Department of Investment and Public Asset Management (DIPAM), stated that the strategic divestment of IDBI Bank has now entered its third stage, meaning technical and financial bids have already been invited. He added that further updates are expected before the end of this financial year.

RBI and Other Regulatory Approvals Required
The successful bidder will require final approval from the Reserve Bank of India (RBI), which will ensure that the buyer meets the regulator’s ‘fit and proper’ criteria. Approvals will also be needed from other statutory and regulatory bodies, including the Competition Commission of India (CCI). Additionally, the winning bidder will be required to make an open offer to minority shareholders of IDBI Bank.