KOCHI: More than two years after expressions of interest (EoI) were received for the sale of a majority stake in IDBI Bank, the formal bidding process is expected to open by June or July this year.
According to experts, typically, such timelines range from six months to a year, and this case, the delay appears to have stemmed from regulatory clearances, fit-and-proper assessments, and the complexities of a joint stake sale by the government and LIC.
Sources close to the development say that the government’s Department of Investment and Public Asset Management (DIPAM) has already taken an informal stock of potential bidders’ interest, especially on valuation.
However, market insiders suggest the final bidding prices will likely dwarf the EoI valuations, making the earlier price discussions largely irrelevant.
IDBI share soars since EoI
Since the initial EoIs were submitted in late 2022, IDBI Bank’s share price has surged past Rs100 (closed at Rs101.59 on NSE today) – almost double the range seen at the time of the initial bids.
This significant change in market conditions means the final bids will be set against a very different valuation landscape. “The final bids will make the EoI prices moot,” said a senior official familiar with the process.
“It’s natural that prices will adjust to reflect current realities rather than outdated benchmarks.”
“The gap of over two years between the expression of interest (EoI) and final bidding for IDBI Bank is highly unusual for a strategic disinvestment process,” top official of a PSU bank told businessbenchmark.news.
During this extended window, the bank’s fundamentals improved and its market valuation nearly doubled, making the initial EoI price assumptions irrelevant.
While EoIs are non-binding, the sheer scale of the shift reflects how protracted timelines can distort pricing expectations.
Among the frontrunners are Dubai-based Emirates NBD, which recently secured RBI approval to operate in India as a wholly owned subsidiary (WOS) – a move that signals its long-term commitment to the market.
Emirates NBD is reportedly willing to pay a premium in an all-cash deal, eyeing a controlling 61 per cent stake in the bank.
Another strong contender is Fairfax India Holdings, led by Canadian investor Prem Watsa, which already has a substantial presence in Indian banking through its majority stake in CSB Bank.
Fairfax’s investment presence in India ranges right from airport to insurance through travel & tourism, chemicals and manufacturing to financial services, with a significant stake in Bangalore International Airport Ltd (BIAL).
Fairfax’s experience and existing infrastructure in India position it well for the IDBI Bank acquisition.
Kotak Bank may not be frontrunner
On the other hand, Kotak Mahindra Bank’s participation appears less certain, with sources suggesting it might fall behind in the race given the stiff competition and valuations involved.
More seriously, Kotak Mahindra Bank faced significant regulatory action from the Reserve Bank of India (RBI) in April 2024 due to serious deficiencies in its IT infrastructure and risk management systems.
This led the RBI to impose restrictions under Section 35A of the Banking Regulation Act, 1949, directing the bank to cease on-boarding of new customers through online and mobile banking channels, and stop issuing fresh credit cards – the restrictions were lifted on February 12, 2025.
As the formal bidding process unfolds, the government is likely to see offers that reflect the bank’s current market capitalisation of over Rs1 lakh crore – a far cry from the valuations during the EoI stage.
This shift will be crucial in determining the eventual buyer and the final price for IDBI Bank’s divestment, which the government aims to conclude by the end of 2025.
