The Industrial Development Bank (IDBI) plans to dilute its stake to around 40 per cent in IDBI Bank by September 2002. IDBI holds 57.14 per cent in the bank, while 14 per cent is held by the Small Industries Development Bank of India (Sidbi).
According to IDBI chairman and managing director P P Vora, "We are looking at two options while diluting our stake in the bank. We will either bring down the stake directly to 40 per cent or will initially bring down the stake to 44 per cent and then again dilute it to 40 per cent. We have decided on a timeframe of September 2002 on the stake dilution."
On the stake that would be offered to the strategic partner, Vora said that it would be up to 20 per cent. However, sources said that around 26 per cent stake will be offered to foreign players.
These players were, however, not interested in the management control of the bank, senior officials added.
Vora added that talks are on with two foreign players. "The two players could be jointly offered the stake." He added, "By January 2003 the final decision on IDBI Bank will be made as we will be clear with the entire picture. Merger with IDBI Bank is however not on the cards."
IDBI is likely to be corporatised in the next few months once the IDBI Act is repealed. By the end of the fiscal 2003 it plans to merge with a public bank for its goal of universal bank.
According to sources, the institution is likely to go in for a mix of preferential allotment and dilution of its stake in the bank. IDBI Bank is looking at placing the shares at around Rs 45 a share but foreign investors were not ready to offer this price.
In the run-up to becoming a universal bank, IDBI is looking at aggressively purchasing government securities from the market in the next quarter.
According to IDBI chairman and managing director PP Vora, "This quarter we will fix up our entire plan of purchasing government securities. The next quarter we will start buying the securities from the market."
IDBI has around Rs 500 crore of securities in its portfolio. In the event of IDBI merging with a public sector bank, it would require securities of around Rs 18,000 crore.
