No govt & LIC veto post privatisation of IDBI Bank

The government and state-owned insurer LIC, who will continue to hold significant shareholding in IDBI Bank post its privatization, will not veto any proposals of the new owner as a part of their plan to give the incoming promoters a free hand, a senior official said.The government earlier this month invited bids for the sale of a 60.72 percent stake in IDBI Bank, which is 45.48 percent owned by the government and 49.24 percent by the Life Insurance Corporation of India (LIC).At Friday’s closing price of Rs 44.30, IDBI Bank has valued at Rs 47,633 crore but the government is looking for at least a 30 percent markup in the sale.At the current price, the sale of a 61 percent stake would fetch about Rs 29,000 crore to the government.The official said that post-privatization, the government, and LIC shareholding will come down to 34 percent but they do not intend to move in tandem to block any special resolution proposed by the new promoter.This is to assuage the concerns of investors.”There should not be any such concern. If we are selling a 60.72 percent stake and transferring management control, it should be clear to investors that we are not interested in controlling the institution and hence will not oppose any resolution,” the official said.