IDBI Bank stake sale: ‘Very, very remote’ chance of finding another buyer at ₹52,000 crore, says DIPAM Secretary Chawla
The government opted to continue with the IDBI Bank disinvestment exercise by giving bidders another opportunity to improve their offers, rather than abandoning the existing process, DIPAM Secretary Arunish Chawla said. He clarified that the reserve price remained unchanged throughout the exercise.
During a conversation with CNBC-TV18, Chawla described the chances of attracting a fresh buyer prepared to pay ₹52,000 crore for the combined government and Life Insurance Corporation of India (LIC) stakes as “very, very remote”.
He stated the authorities weighed three alternatives — cancelling the initial bidding exercise, accepting the offer already received, and inviting improved bids — before the Core Group of Secretaries on Disinvestment (CGD) settled on seeking revised or best offers to maximise the transaction value.
Chawla explained that the subsequent bidding exercise differed from the initial round because all parties involved were already aware of the price discovered during the first phase.
He said strategic disinvestment deals are not conducted like regular auctions with a fixed reserve-price threshold against which every bid is evaluated.
Rejecting the view that offers below the reserve price are automatically ineligible for approval, Chawla pointed to the Paradeep Phosphates privatisation, where the accepted offer was 15% lower than the reserve price.
He further said the revised offer exceeded the fair-value assessments as well as their average. The Core Group of Secretaries on Disinvestment (CGD) unanimously considered the improved bid reasonable, he added.
Chawla said the government introduced an income-tax indemnity capped at ₹627 crore for the bidders, a provision that contributed to a ₹3,917-crore increase in the bid value.
He mentioned the decision was based on the overall financial gains expected to accrue to the government and LIC from the transaction, rather than viewing the reserve price as a rigid benchmark.
Chawla reiterated that the reserve price remained unchanged throughout the bidding exercise and was neither revised nor fixed again.
On October 14, the government cleared the proposed sale of a 60.72% stake in IDBI Bank to Canada-based Fairfax Financial Holdings for approximately ₹53,000 crore ($5.5 billion). The deal, if completed, would mark the largest foreign investment in an Indian bank and a significant step forward in the country's long-pending banking privatisation programme.
The strategic disinvestment is targeted for completion by the end of the current financial year, subject to regulatory approval from the Reserve Bank of India (RBI).
Garvit Bhirani is a journalist based in Gurugram. He is a Deputy Chief Content Producer at LiveMint, where he covers national and international news stories, focusing on accuracy and compelling storytelling for readers. <br><br> With a total of six years of experience in journalism, he has previously worked with Vaco Binary Semantics for Google, taking on the role of news curation lead, and reported from the field on health, education, and agriculture stories for 101reporters and News9. He has also served as a content editor for entertainment and news media organisations. <br><br> Garvit holds bachelor’s and master’s degrees in journalism and mass communication from Guru Gobind Singh Indraprastha University and Gurugram University, respectively. During college days, he joined India’s only non-profit student journalism network, where he anchored daily news updates and produced his own weekly show called ‘Data Fix’. <br><br> He was selected for the YES Foundation Media for Social Change Fellowship in Delhi, the Talking Data to the Fourth Pillar residential workshop, and the VOICE Fellowship in Pune. <br><br> He holds certificates in COVID-19-verification reporting, data journalism, food & agriculture, tech policy, media literacy and countering misinformation, and tackling election disinformation courses from Thomson Foundation, IndiaSpend, The Dialogue, US Mission in India, and AFP. <br><br> He can be reached on <a href="https://www.linkedin.com/in/garvit-bhirani">LinkedIn</a> or on <a href="https://x.com/GarvitBhirani">@garvitbhirani</a> on X
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