During the first half of this year, the stock has declined 8 percent, while it has advanced 46 percent since the start of June. While the government owns 45.48 percent in the bank, LIC owned another 49.24 percent as of June 30, data has shown.
Shares of IDBI Bank Ltd surged over 9 percent and hit a four-month high at Rs 43.85 on BSE in the early morning trade after a report said that the government was planning to sell at least 51 percent in the state-backed lender.
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At 1:00 pm, the IDBI Bank stock was trading at Rs 48.7, up 8.9 percent from its previous close on the BSE.
The government and state-owned Life Insurance Corporation (LIC) own nearly 94 percent in IDBI Bank. While the government owns 45.48 percent stake, LIC held 49.24 percent as of June 30, data has shown.
LIC and the government will take buyer interest by the end of September, as per a Bloomberg report. The report added that a group of ministers would make the final decision on the deal's structure. According to the report, authorities also plan to cut management control.
CNBC-TV18 had on July 25 reported that the government and the LIC together might sell up to 65 percent stake in IDBI Bank.
Shares of IDBI Bank have jumped 6.3 per cent in the past 12 months, this has raised its market valuation to about Rs 42,470 crore.
During the first half of this year, the stock has declined 8 percent, while it has advanced 46 percent since the start of June.
The RBI will allow investors to buy a stake larger than 40 percent, as firms need permission from the central bank to purchase stakes above that threshold, while non-regulated firms are capped at purchases of 10-15 percent.
LIC had stated in its IPO filings in March that it would retain part of its 51 percent stake in IDBI Bank to benefit from bank assurance. As the government wants to exit the bank, it will be completely privatised. As a result of the acquisition of 82,75,90,885 additional equity shares, IDBI Bank became a subsidiary of LIC in January 2019.
As a result of LIC's shareholding reduction to 49.24 percent, IDBI Bank was reclassified as an associate company on December 19, 2020.
Using policyholders ' funds, LIC also invested Rs 4,743 crore into IDBI Bank in October 2019. The bank further raised Rs 1,435.1 crore on December 19, 2020, by way of a QIP, which brought down LIC’s stake in IDBI to 49.24 percent.
In addition, other mid-sized public sector banks traded higher.
For the third consecutive session, the Nifty PSU Bank index gained 2.23 percent to 2,931.80. Overall, the index gained 5.14 percent.
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