IDBI Bank sells distressed Rs 6151 cr portfolio to Omkara ARC
IDBI Bank is selling its Rs 6,151 crore legacy stressed asset portfolio to Omkara Asset Reconstruction Company (ARC) in a move that will help the government fetch an improved valuation for the proposed stake sale in the lender, people with knowledge of the matter told ET.
At inter-se bidding held on Saturday (August 3), Omkara ARC gave the highest offer of Rs 652 crore, outbidding government-promoted National Asset Reconstruction Company Ltd (NARCL). For IDBI Bank, the distressed portfolio sale equates to a recovery of 10.5%, which will be reflected in its second-quarter earnings.
“The sale of the stressed portfolio will have a significant positive impact on IDBI Bank’s valuation since potential bidders were wary of acquiring a bank with legacy loans, which the bank itself failed to resolve for over two decades,” said an advisor involved in the transaction who did not want to be named.
IDBI Bank and Omkara ARC did not respond to ET’s request for comments.
For over two years, there has been a buzz about the government selling a part of its stake in the bank without it making much headway. In May 2021, the government said that the Cabinet approved the strategic sale of its stake and LIC stake in IDBI, and in October 2022, it invited expressions of interest from interested parties.
The government holds 45%, and the Life Insurance Corporation (LIC) has a 49.24% stake in the bank. They have proposed to sell a 60.7% stake to a private player with a precondition to dilute the stake to 26% over some time. According to
