New Delhi
State-owned insurance behemoth LIC has said that it will retain part of its stake in IDBI Bank to reap the benefits of the bancassurance channel.
Along with the government, Life Insurance Corporation (LIC) will also divest its stake in IDBI Bank, but may not exit completely, LIC Chairman MR Kumar told PTI in an interview.
LIC is currently doing roadshows for its maiden public issue, which opens for subscription on May 4. The government for the past few years has been planning to sell its 45 per cent minority stake in IDBI Bank to strategic investors as part of its privatisation drive.
Last week, the Department of Investment and Public Asset Management (DIPAM) Secretary Tuhin Kanta Pandey had said the IDBI Bank privatisation process was underway and that the quantum of the stake sale would be determined after the completion of the roadshow.
IDBI Bank became a subsidiary of LIC with effect from January 21, 2019, following the acquisition of an additional 82,75,90,885 equity shares.
On December 19, 2020, IDBI Bank was reclassified as an associate company due to the reduction of LIC shareholding to 49.24 per cent following the issuance of additional equity shares by the bank under a Qualified Institutional Placement (QIP).
“Strictly speaking, we are below the threshold limit of management control but then, what government really means is that management control is to be given in such a way that a private entity picks up and runs the bank, and government in the process gets value out of that,” Kumar said.
He further said that “since LIC is also in the picture, my stand has always been very clear that we will also divest along with the government, but it may be 49 per cent. So, it will depend on how this whole transaction plays out and what kind of investors express interest”.
He further said LIC does not want to “hold a big stake” but some holding as it has been a win-win for both entities.
