Seven international firms including some of the big four global consultancies have been shortlisted as transaction advisers for government’s stake sale in IDBI Bank.
Deloitte Touche Tohmatsu India, EY, KPMG, JM Financial, ICICI Securities, RBSA Advisors and SBI Capital Markets are in the race for the key appointment, as per a notice issued by the department. Each of these firms will make presentations to the department of investment and public asset management (DIPAM) on August 10, A final firm will be selected as the transaction adviser from the seven.
The government has kick-started the process of sale of its stake in IDBI Bank, where government shareholding is at 45.48%, LIC of India holds 49.24% and non-promoter shareholding is at 5.29%. The Cabinet Committee on Economic Affairs had given an in-principle approval for the strategic divestment of IDBI Bank in May this year, which includes giving up management control.
The government also clarified that bidders for appointment of transaction advisor for strategic divestment of IDBI Bank will not be allowed to bid in consortium, adding that once appointed, the advisor will remain for five years. A quarter of the fee payment to the adviser will be paid at the time of shortlisting of bidders after expression of interest (EoIs) are received. The rest will be paid after completion of the transaction.
DIPAM has barred public sector banks, which cannot participate as bidders for acquisition of IDBI Bank, in the transaction process. Subsidiaries of IDBI Bank – IDBI Capital Markets – cannot participate as bidders either for transaction advisors. DIPAM has barred a person or company owning more than 50% equity interest in the merchant banker or controlling the merchant bankers from participating in the competitive process for acquisition of IDBI Bank.
Among several criteria listed for eligibility, bidders for transaction advisors should have completed at least one transaction of strategic disinvestment, strategic sale or merger and acquisition of Rs 5000 crore or more in size, between April 2016 and March, 2021. In case the interested transaction advisor is a subsidiary of an existing retail bank, they need to provide documentation explaining firewall or Chinese-wall structure to maintain confidentiality and conflict of interest