Shriram Group likely to submit EoI for IDBI Bank If a consortium is formed, the non-bank lender will be the lead member
The Shriram Group is likely to submit an expression of interest (EoI) for IDBI Bank and has been working on a structure for a possible bid for the state-owned lender that is being sold through a competitive bidding process, according to people in the know. The Chennai-headquartered financier may float a separate holding company to participate in IDBI Bank's privatisation, the people said.Fairfax Also Likely Contender
The entry of R Thyagarajan-led Shriram - which operates in segments such as commercial vehicle financing, two-wheeler financing and micro, small and medium enterprise loans - could set the stage for at least a two-way contest for IDBI Bank with Prem Watsa's Fairfax Financial also believed to be a contender.
While talks to form a consortium with financial investors are also underway, Shriram has not reached a mutually acceptable commercial arrangement with investors that may want to join its consortium. If a consortium is formed, the non-bank lender will be the lead member.
Shriram was amongst 18 participants that attended virtual roadshows organised by the government in April to brief potential suitors about the privatisation plan, according to sources. The government of India released a preliminary information memorandum on October 7, detailing its proposal to sell a majority stake in IDBI Bank. The deadline for submission of EoIs for IDBI Bank is December 16.
"The query is speculative. As a matter of policy, we do not comment on speculation," said a Shriram Group spokesperson.
Fairfax chairman Prem Watsa told ET in an April 7 interview, when asked about his company's interest in the upcoming privatisation of banks, that it was "looking at all of those opportunities."
IDBI Bank's privatisation has been designed as a two-stage process. In the first, potential suitors will submit EoIs. Their suitability to participate in the privatisation process will be assessed by the Reserve Bank of India (RBI) and they will have to clear the regulator's 'fit and proper' test and get government security clearance. In the second stage, those that have cleared the first stage will be allowed to conduct due diligence and submit a financial bid for the bank.
The government of India and state-run Life Insurance Corp. of India (LIC) are selling a 60.72% stake in IDBI Bank as per the preliminary information memorandum issued by the Department of Investment and Public Asset Management (DIPAM). Their combined ownership in the bank is 94.72%. After the stake sale they will collectively retain 34%. Interested parties need to have a minimum net worth of ₹22,500 crore to submit an EoI.
This story originally appeared on: India Times - Author:Tax Cognition
