Business Case: Why are Govt and LIC selling IDBI? |IDBI Bank Latest News |

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IDBI Bank is one of the most widely spread banks in India. It was established in 1964 as a Development Finance Institution or DFI. It functioned as a DFI until 2004. Now, about 94.71% of IDBI shares are owned by the Government of India and LIC. The government and LIC together are looking to sell 60.72% of IDBI Bank and had invited bids from potential buyers in October.

IDBI Bank share news is not very hopeful because the returns generated by LIC on its investment in IDBI are not very promising. IDBI bank share future depends on multiple factors. In this video, I’ve discussed why LIC bought a stake in IDBI and why LIC is now selling its stake in IDBI bank. IDBI share analysis suggests that LIC bought the shares of IDBI in 2019 at the price of ₹61 per share and now the share price of IDBI is trading at ₹60.5 per share. This is not a great ROI for LIC. Also, because of the regulatory clause regarding the home loan levied by RBI during the LIC takeover of IDBI is preventing LIC from holding the IDBI shares for very long.

The government of India on the other hand sets a disinvestment target every year. Ever since the LPG reforms of 1991, the Government of India has tried to disinvest in the PSUs. This is why the government is selling PSU for a long time. In the current NDA government, the pace of disinvestment has increased. IDBI privatization is a necessary step for the government to raise money to finance fiscal deficits and debt. IDBI bank latest news is that the bids for IDBI buying were asked for until 7th January. Many banks have shown interest in buying IDBI.

In the end, I’ve discussed the reasons why some players would want to buy IDBI and what it is in it for them. Hope you like this analysis and that it helps you make sense of this whole situation. IDBI privatization is an ongoing process and since LIC is going to keep some stake in the bank even after the sale, it will be interesting to see how the new entity functions and what improvements come about in IDBI’s performance.

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Chapters

0:00 - Intro
0:32 - GOI and LIC selling a stake in IDBI
1:07 - Why LIC bought IDBI?
1:48 - Why LIC is selling its IDBI stake?
2:39 - Why GOI is selling IDBI shares?
3:42 - Why would someone buy IDBI?
4:20 - Business synergies to buy IDBI
4:44 - Outro