Disinvestment of the government’s stake in IDBI Bank could happen via qualified institutional placement (QIP) with strategic investors, said top bank officials.

Though the government-owned bank had embarked on overseas road shows in January 2016 for raising capital via QIP, it deferred the actual resource-raising due to the not-so-encouraging market conditions.

The QIP size was raised from the earlier approved ₹2,800 crore to ₹3,771 crore, in line with the Government of India’s approval.

There have been reports that IFC (a member of the World Bank group), CDC Group plc (a UK-based development finance institution), and GIC (a Government of Singapore arm which manages over $100 billion of assets across 40 countries) are among the global investors which have evinced interest in the QIP issue.

Overall, IDBI Bank is expecting to mop up about ₹6,000 crore in the current fiscal to support its growth plans. Of this, depending on the valuation, ₹3,771 crore or more could come via QIP; the balance could be raised via additional tier-I (AT1) capital.

If QIP or AT1 do not materialise, the bank may monetise its non-core assets — investments in NSE, NSDL, SIDBI, ARCIL, Care Ratings and NEDFI — to raise the targeted amount.

The bank has already begun the monetisation exercise. In March 2016, it sold 2 per cent stake in NSE to Life Insurance Corporation of India. Currently, it has 3 per cent stake in NSE.

In his Budget speech of FY2017, Union Finance Minister Arun Jaitley said, “The process of transformation of IDBI Bank has already started. The government will take it forward and also consider the option of reducing its stake to below 50 per cent.” As at March-end 2016, the Centre held 73.98 per cent stake in the bank.

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