Finance Ministry Justifies IDBI Bank Valuation, Boosts Deal by ₹3,917 Crore
The Ministry of Finance defends the valuation process of IDBI Bank's stake sale, attributing a ₹3,917 crore increase to special powers granted to the Core Group of Secretaries.
The Core Group of Secretaries increased IDBI's sale value by ₹3,917 crore.
The stake sale to Fairfax Financial Holdings was approved at ₹53,000 crore.
The valuation methodology involved independent assessments and was reviewed before bidding.
On October 29, the Ministry of Finance provided a comprehensive defense regarding the valuation and bidding process for the strategic sale of IDBI Bank. The ministry stated that the Core Group of Secretaries on Disinvestment (CGD) utilized special powers to enhance the transaction value by ₹3,917 crore through a 'best-offer' bidding procedure. The ministry clarified that the reserve price remained unchanged, and the initial bidding round was rendered void after the bids did not meet the criteria.
The Cabinet Committee on Economic Affairs had previously approved the sale of a 60.72% stake in IDBI Bank to Canadian firm Fairfax Financial Holdings on October 14, with the total transaction valued at approximately ₹53,000 crore. The approved bid was set at ₹81 per share. The ministry's press release emphasized that the first bidding round was conducted in the financial year 2025-26, following internal guidelines that are not rigid regulations.
The ministry elaborated that there is no predetermined benchmark for bids, allowing bidders to conduct their own valuations confidentially. Independent agencies were engaged to perform fair valuations, which served as a reference for assessing the submitted bids. The CGD was the only entity privy to both the bids and the valuations, ensuring an unbiased comparison.
In terms of methodology, the valuation process was reviewed by the CGD in April 2026, prior to inviting bids. The independent valuation agencies began their assessments in May 2026, ensuring that the valuations were contemporaneous with the bids. The valuation was conducted by two separate advisers using distinct methodologies, with the Comparable Company Method employed due to the absence of suitable comparable transactions.
The implications of this stake sale extend beyond immediate financial gains. The government and LIC retain residual shares, anticipating future benefits from IDBI Bank's strategic restructuring. The clarification from the ministry comes in response to concerns raised by a BW Businessworld report, which suggested that the valuation process was manipulated to favor the buyer. The ministry's defense aims to restore confidence in the transparency and integrity of the disinvestment process.
