IDBI Bank jumps near 15% intraday, hits new 52-week high on the back of divestment news
The government-owned IDBI Bank spurted by around 15 per cent to Rs 43.50 per share in the early trade on Thursday, after Cabinet gave in-principle nod for strategic disinvestment in the bank.
IDBI Bank also touched its fresh 52-week high today at Rs 55.75 per share intraday. On the back of heavy volumes, the stock is currently up over seven percent to Rs 40.70 per share. The stock on Wednesday closed at Rs 38 per share.
A total of 8.3 crore IDBI Bank stocks have traded on NSE, while around 76.04 shares of IDBI Bank exchanged hands on BSE so far in the session.
The Cabinet Committee on Economic Affairs on Wednesday gave its in-principle approval for strategic disinvestment along with transfer of management control in the bank.
CCEA in a statement said, "The extent of respective shareholding to be divested by GoI (Government of India and LIC (Life Insurance Corporation) shall be decided at the time of structuring of transaction in consultation with RBI (Reserve Bank of India)."
At present, the government and Life Insurance Corporation of India (LIC) together hold 94 per cent of the equity of IDBI Bank. The government holds a 45.48 per cent stake, while LIC has 49.24 per cent. The latter is the promoter of IDBI Bank with management control and the former is the co-promoter.
The government expects that a strategic buyer will infuse funds, new technology, and best management practices for optimal development of business potential and growth of IDBI Bank Ltd. and shall generate more business without any dependence on LIC and Government assistance/funds.
The statement mentioned that resources through strategic disinvestment of the government equity from the transaction would be used to finance developmental programmes benefiting the citizens.
Finance Minister Nirmala Sitharaman in her Budget 2021 speech had announced the divestment of the IDBI Bank along with other PSU (Public Sector Unit) companies.
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