The long-awaited privatisation of IDBI Bank has gained fresh momentum. A new media report suggests that Kotak Mahindra Bank has joined the race to acquire a stake in IDBI Bank, adding significant interest to an already closely tracked strategic sale.

Contents

Stake Sale Challenges Highlighted in the Report Government Targets FY26-End for Privatisation Completion Due Diligence Completed; Bids Expected Between October–December LIC’s Reclassification and Its Impact

According to a report by NDTV Profit, Kotak Mahindra Bank is exploring participation in the stake sale process alongside global players Oaktree Capital and Fairfax. However, the report also notes that Kotak Mahindra Bank has not officially confirmed or denied its involvement. Moneycontrol has also stated that it cannot independently verify this development.

Stake Sale Challenges Highlighted in the Report

The NDTV Profit report outlines the key concerns faced by potential suitors—most notably the large market capitalisation of IDBI Bank.
The lender currently commands a valuation of around Rs 1 lakh crore, creating a substantial barrier for any investor planning to purchase a 60% stake.

This high valuation significantly increases the financial commitment required from bidders. The report suggests that Kotak Mahindra Bank may look at a part-equity, part-cash merger deal, leveraging equity as a strategic currency to ease the acquisition burden. However, this possibility remains unconfirmed.

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Government Targets FY26-End for Privatisation Completion

The Centre has already indicated earlier that it aims to finalise the privatisation of IDBI Bank by the end of the 2026 fiscal year. The process involves the sale of a 61% stake in the bank.

In terms of the current shareholding structure:

45.48% of IDBI Bank is owned by the Government of India, and
49.24% is held by the Life Insurance Corporation of India (LIC).

The Department of Investment and Public Asset Management (DIPAM) is leading the divestment process, which is one of the most significant banking privatisation moves in recent years.

Due Diligence Completed; Bids Expected Between October–December

A Reuters report cited in the content confirms that India has completed due diligence for the stake sale. The government now plans to invite financial bids between October and December, according to statements made earlier this month by the country’s divestment secretary.

The privatisation process was originally announced in 2022, and the latest updates suggest renewed progress toward execution.

LIC’s Reclassification and Its Impact

LIC, which became a promoter of IDBI Bank after taking control of the lender in 2019, is no longer classified as a promoter shareholder. This reclassification removes LIC’s board representation and strategic influence, aligning its role with that of a financial investor.

This change also simplifies the governance structure, making the bank’s ownership and future strategy more streamlined for prospective buyers.

IDBI Bank Share Price Reaction

In the stock market, IDBI Bank shares closed at Rs 100.25 on the BSE during Friday’s trade. The stock fell by Rs 2.60, marking a 2.53% decline for the session. This movement reflects investor reactions amid ongoing developments around the bank’s privatisation journey.

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