IDBI Bank shares jump 2% as Sebi approves LIC reclassification as a public shareholder

Shares of IDBI Bank jumped 2.4% to their day’s high of Rs 97.30 on the BSE in early trade on Monday, August 25, after the lender announced that the Securities and Exchange Board of India (SEBI) has approved the reclassification of Life Insurance Corporation of India (LIC) as a public shareholder following the completion of the government-led divestment process.

In a regulatory filing, IDBI Bank said SEBI’s clearance is subject to multiple conditions. These include restricting LIC’s voting rights to not more than 10% of the lender’s total net effective voting rights.

In addition, LIC will not participate in IDBI Bank’s management, will not enjoy any special rights, and will not be represented on the board of directors.

Once the divestment is completed, LIC will be treated at par with any other public investor in the bank.

At present, the combined stake of the government and LIC in IDBI Bank exceeds 95%. Both stakeholders are undertaking a stake sale that will involve divesting a total of 60.72% in the bank.

The government, which holds 45.48%, plans to sell 30.48%, while LIC, which owns 49.24%, intends to offload 30.24%.

The IDBI Bank divestment has been a key element of the government’s asset monetisation programme. According to Department of Investment and Public Asset Management (DIPAM) Secretary Arunish Chawla, qualified bidders have nearly completed their due diligence process. He recently stated that most queries from interested parties have been addressed, raising expectations of completing the stake sale within the ongoing fiscal year.

The government has already mobilised Rs 20,000 crore in the first quarter of the financial year against its overall asset monetisation target of Rs 47,000 crore.

IDBI Bank noted that the approval from SEBI on LIC’s reclassification aligns with the broader disinvestment process and regulatory requirements. The changes will come into effect only once the strategic sale is concluded and LIC’s shareholding is reclassified under the “public shareholder” category.

On Friday, IDBI Bank shares closed 2.7% lower at Rs 95 on the BSE.

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