New Delhi: After getting a go-ahead from regulator Insurance Regulatory and Development Authority of India (IRDAI), Life Insurance Corporation of India (LIC) is preparing to complete the 51% acquisition of debt-ridden IDBI Bank Ltd by the end of September, people familiar with the matter said. LIC is conducting due diligence on IDBI Bank, its assets, debt position and fixed assets, the people added.

Besides, LIC also intends to make an open offer to minority shareholders of IDBI Bank. According to the Securities and Exchange Board of India’s (Sebi) takeover code, an acquirer has to make an open offer to shareholders of the target company on acquiring shares or voting rights of 25% or more.

The board of IRDAI, at its meeting held in Hyderabad last month, had permitted LIC to increase its holding from 10.82% to 51% in IDBI Bank.

Current regulations do not permit an insurance company to own more than 15% stake in any listed financial firm. LIC has been eyeing a majority stake in IDBI Bank as the deal is expected to provide business synergies despite the lender’s stressed balance sheet.

Also read: LIC-IDBI Bank deal: The good, the bad, the ugly

IDBI Bank, which is grappling with mounting toxic loans with gross non-performing assets (NPAs) rising to a staggering 55,600 crore at the end of the March quarter, will receive much-needed capital to revive its fortunes. At the end of March, the lender’s net loss stood at 5,663 crore.

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