Kotak Mahindra Bank has reportedly completed its due diligence process to acquire the government’s stake in IDBI Bank, making it a strong contender in the race to take over the bank. The due diligence process involved reviewing confidential information such as borrower data, exposure, and loan provisions to assess the bank’s financial health. With Kotak Mahindra Bank’s entry, the competition becomes more interesting, as two global players, Oaktree Capital Management and Fairfax Financial, have already completed their due diligence.
Fairfax Financial already owns a 40% stake in CSB Bank, while Emirates NBD may no longer be in the race after its recent acquisition of RBL Bank. Kotak Mahindra Bank could become the front runner in the race for IDBI Bank, as it is the only domestic contender to buy the government’s stake. The government and Life Insurance Corporation (LIC) hold 94% in the bank, and the transaction could involve acquiring a majority stake of up to 60.72%.
The government aims to finalize the winning bidder by the end of FY26, with the deal potentially valuing IDBI Bank around $8-10 billion. The bank is in advanced discussions with government-appointed advisers, and final financial bids are expected to be invited in the coming quarter. The government first announced its intent to divest IDBI Bank in February 2021, and the formal process began in October 2022, when the Department of Investment and Public Asset Management (DIPAM) invited expressions of interest (EoIs) for the bank’s strategic sale.
By January 2023, DIPAM confirmed it had received multiple EoIs, and around September, four shortlisted bidders who cleared the Reserve Bank of India’s ‘fit and proper’ assessment were granted access to the data room, initiating the buyer due diligence phase. Kotak Mahindra Bank’s spokesperson declined to comment on the development, stating that they would revert with an update if any. The acquisition of IDBI Bank is expected to be a significant deal, and the government is keen to finalize the process by the end of FY26.