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Money > Business Headlines > Report April 8, 2002 | 1215 IST |
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IDBI to exit IDBI BankGeorge Smith Alexander & K Ram Kumar The Industrial Development Bank of India has decided to exit its banking subsidiary, IDBI Bank. IDBI's stake in the bank is currently pegged at around 57 per cent and another 14 per cent is held by the Small Industries Development Bank of India. Along with IDBI, SIDBI, too, will exit from the bank. At the first stage, IDBI is planning to offload 26 per cent stake through a preferential allotment to a strategic investor. Speaking to Business Standard, IDBI deputy managing director T M Nagrajan said: "We would like our subsidiaries to grow. We don't want to impede their growth plans. We expect the value of our investments in IDBI Bank to grow once the new investors come in. The investments could help the bank to go in for major expansion plans. Though our stake will come down after the allotment, the value of our investments will go up substantially. We will cash in on our remaining stake in the bank in one or two tranches." Nagrajan refused to commit on the timeframe of the proposed divestment. "Now, we cannot hazard a guess on precisely when we will do this. It could happen in the next 12-18 months," Nagarajan said. SIDBI will also cash its stake in the bank. When contacted, SIDBI officials said they would also follow IDBI's stand on diluting their stake in the bank. After the first tranche of preferential allotment, SIDBI's stake in the bank will come down to around 10 per cent while IDBI's stake in the bank will stand at around 40 per cent. The preferential allotment will help the bank in shoring up its capital adequacy ratio, which is currently hovering around 9 per cent. Once IDBI gets out of the bank totally, IDBI Bank will also go for a change in name. The bank had already shortlisted three names, sources said. The bank is currently in talks with three to four players, including foreign institutions and banks. Sources indicated these foreign banks, which have approached IDBI Bank, do not have any operations in India. IDBI Bank is likely to make a preferential allotment between Rs 47 and Rs 53. The deal is likely to be concluded next month. IDBI had earlier approached IDBI Bank for an extension of time for lowering its stake to the RBI-stipulated 40 per cent. The deadline expired on March 31. ALSO READ:
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