Govt seeks to appoint advisors to assist IDBI Bank privatisation

The government has sought bids to appoint transaction advisor legal advisor to assist it for the strategic divestment transfer of management control in IDBI Bank. The appointment of intermediaries would help in taking the privatisation process of the lender forward as the government aims to close the transaction in this fiscal.

The government plans to sell its 45.48 per cent shareholding in the lender. Life Insurance Corporation of India (LIC), which owns 49.24 per cent, will also offload its stake to transfer management control to the new buyer.

The transaction advisor would be required to advise the government on the modalities the timing of the strategic disinvestment of IDBI Bank, prepare a scheme to successfully implement the sale. Any company that owns more than 50 per cent stake in a merchant bank, seeking to assist the government as the transaction advisor, would not be able to participate in the bidding process to acquire IDBI Bank.

The transaction advisor would be required to execute a non-disclosure agreement provide appropriate information to bidders. They will also finalise the sale process through bidding or auction, assist the government in fixing the reserve price considering the valuation of IDBI Bank.

The government is also seeking to appoint a legal advisor who will review advise on all legal contracts, including titles of property assets, intellectual property rights, loan agreements, contracts with employees. They would also advise the government on the regulatory norms, assist in obtaining approval exemptions from all applicable regulatory agencies including Securities Exchange Board of India (SEBI), the Reserve Bank of India (RBI) Insurance Regulatory Development Authority of India (IRDAI).

Transaction advisors legal advisors can submit their bids until July 13.

Last month, the Cabinet Committee on Economic Affairs (CCEA) had approved strategic divestment in IDBI Bank, with the condition that extent of shareholding to be offloaded by the government LIC would be decided at the time of structuring of transaction, in consultation with RBI.

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