The long-awaited divestment process at IDBI Bank has progressed to the next stage, with global consultancy firm KPMG conducting closing due diligence on the lender, according to MoneyControl. This critical phase will culminate in a report that will first be reviewed by the bank’s board and subsequently shared with potential bidders to guide their financial proposals.
Key Developments:
- Due Diligence Process:
- Closing due diligence commenced about a week ago and is expected to conclude within a month, as per a highly placed source aware of the development.
- This stage aims to verify that assumptions made in earlier transaction documents remain accurate. Any changes identified during this process could lead to revisions in the bank’s valuation.
- Next Steps:
- Once the due diligence is completed, the Department of Investment and Public Assets Management (DIPAM) will invite potential investors to submit bids for acquiring a 60.7% stake in the bank.
- Bidding is unlikely to start before March 2025, potentially pushing the divestment timeline into FY26.
Historical Context:
The government announced its decision to divest its stake in IDBI Bank during the Budget 2021. This involves Life Insurance Corporation of India (LIC) and the government jointly offloading 30.24% and 30.48% stakes, respectively.
- KPMG’s Role:
- The firm initially conducted vendor due diligence in December 2020, which served as the basis for potential investors to submit their expressions of interest (EOI) in October 2022.
- Closing due diligence, a practice aligned with good corporate governance, ensures the validity of transaction assumptions ahead of financial bidding.
- Interested Bidders:
- Reports indicate interest from entities such as Prem Watsa-led Fairfax, Kotak Mahindra Bank, and Emirates NBD. The Reserve Bank of India has already cleared a few investors as “fit and proper” to submit financial bids.
With the process now in its advanced stages, delays in the IDBI Bank divestment are expected to be minimal.
Disclaimer: The information provided is for informational purposes only and is based on reports from Moneycontrol. It should not be considered as financial or investment advice. Always consult a financial advisor or conduct your own research before making any investment decisions.
