22% of IDBI Bank’s shareholders exit the bank following LIC’s open offer

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Following an open offer from Life Insurance Corporation of India (LIC), about 22% of IDBI Bank’s minority shareholders exercised their option to exit the bank. LIC is taking over a majority stake in IDBI Bank. Due to this, a majority of IDBI Bank’s minority shareholders have continued to hold their shares in the bank, thus indicating their confidence in the new management.  

LIC
22% of IDBI Bank’s minority shareholders exit the bank following LIC’s open offer.

Industry sources stated that the existing shareholders of IDBI Bank have continued to hold their shares in the bank hoping that the value of the shares will significantly increase in the future once the new management takes over.  

LIC had made an open offer for a total of 2,04,15,12,929 shares last month. The price was fixed at Rs.61.73 apiece. The public sector life insurance company had increased its shareholding in IDBI Bank beyond 44% prior to making the open offer.  

In August 2018, the Cabinet approved LIC’s acquisition of a majority stake in IDBI Bank through a combination of an open offer of equity and preferential allotment. The state-run insurance company has been on the look out for an entry into the banking sector by acquiring a controlling stake in IDBI Bank.  

Post the completion of the deal, LIC will have access to around 2,000 branches of the bank, through which the company’s insurance products can be sold. IDBI Bank, on the other hand, will get access to LIC’s funds. The lender will get the accounts of nearly 22 crore policyholders and will also get funds from the insurer subsequently.  

IDBI Bank registered a net loss of Rs.3,602.49 crore during the quarter that ended in September 2018. The gross non-performing assets (NPA) came up to 31.78% (Rs. 60,875.49 crore), in comparison to a gross NPA of 24.98% (Rs.51,367.69 crore) during the corresponding period in the previous financial year.  

Sources: The Times of India, Business Today

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