MUMBAI (Reuters) -India’s markets regulator has approved Life Insurance Corporation’s request to be reclassified as a public shareholder in IDBI Bank, LIC said in a stock exchange filing on Sunday, paving the way for a strategic sale in the lender.
India has completed due diligence for the stake sale of IDBI Bank and plans to invite financial bids between October and December, the country’s divestment secretary said earlier this month.
The government, which owns 45.48% in IDBI Bank, and state-owned Life Insurance Corporation of India, which holds 49.24%, together plan to sell 60.7% of the lender. The sale process was first announced in 2022.
Reuters has reported that interested buyers include Emirates NBD and Canadian billionaire Prem Watsa.
LIC was previously classified as a promoter shareholder in IDBI Bank, a status it acquired after taking control of the lender in 2019.
As a promoter, LIC had board representation and strategic influence over the bank’s operations. The reclassification strips LIC of those rights, aligning its role with that of a financial investor.
The Securities and Exchange Board of India (SEBI) granted the approval on the condition that LIC does not exercise control or have board representation, and limits its voting rights to 10%, according to separate filings by the insurer and the bank.
LIC must also reduce its stake to 15% or below within two years of the bank’s reclassification, the filings said.
The sale is targeted for completion within the current fiscal year, Arunish Chawla, secretary of the Department of Investment and Public Asset Management has said.
Shares of IDBI Bank are up nearly 25% so far this year.
(Reporting by Swati Bhat; Editing by Lincoln Feast.)
