New Delhi, February 24 (PTI) Investment and Public Asset Management (DIPAM) on Monday invited trader bankers and legal companies to bid to assist the government in divesting its stake in public sector banks and listed financial institutions.
Under two RFPs (Proposal Request) filed by DIPAM, merchant bankers and legal counsel will be granted three years, which can be extended by one year. The last day for the businessman banker to bid is March 27.
DIPAM under the Ministry of Finance manages government equity in public sector entities.
Currently, many public sector banks and financial institutions have not met the public stake specifications of at least 25% stipulated by market regulator SEBI. The government has set a deadline for the entity to reduce government holdings and comply with public floating norms on August 1, 2026.
At the invitation of a bid to invite a businessman banker to bid, the government set the ball to reduce its stake in banks and financial institutions.
Currently, the five public sector banks have not met the minimum public equity norms. Currently, the government holds 98.3% of the shares in Punjab & Sind Bank, 96.4% of the shares in India, UCO Bank holds 95.4% of the shares, 93.1% of the central bank of India, in Maharashtra Bank of Maharashtra holds a 93.1% stake.
In addition, it holds 86.36% of shares in financial institution IRFC, with the insurance company’s New India guarantee of 85.44% and 82.40% in general insurance companies.
In addition, Finance Minister Nirmala Sitharaman announced in her 2021-22 budget speech that the government intends to privatize two public sector banks besides IDBI Bank.
The privatization of IDBI Bank is currently being processed.
According to the RFP, Merchant Banker Sales Brokers will provide the government with the timing and trading methods of certain PSU banks/selected public financial institutions regarding the timing and trading methods of transactions.
“The Government of India (GOI) intends to dilute GOI equity in certain public sector banks (PSBs) to last Empanel BRLMS/MBSB for three years (which can be further expanded for one year) and select the listed public financial institutions ( PFIS (Using the Company Act 2013, the SEBI-approved method is used in accordance with existing SEBI/RBI/IRDAI and stock exchange regulations/criteria.”
Merchant bankers can apply for Empanelment from DIPAM under two categories, depending on the bidder’s ability to handle capital market transactions. The authorization category for transaction size will be “A” ₹25 billion or more, with less transaction size than ₹25 billion.
In business merchant bankers, DIPAM can select one or more bankers to conduct specific transactions according to requirements.
They will be asked to conduct market research, domestic and international road exhibitions to attract the interest of potential investors. Arrange meetings with senior management and domestic and international investors, including agencies and HNI, to promote communication about the growth potential of entities and to clarify key marketing themes and positioning of entities.
DIPAM said all costs in this regard will be borne by bankers, in addition to travel and stay costs for government and PSB/listed PFI officials.
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