IDBI likely to offload 51 pc of SIDBI at Rs 30 a share

The IDBI board approved the proposal of offloading 51 per cent stake in SIDBI, top IDBI officials said after a meeting here."It has b...

The IDBI board approved the proposal of offloading 51 per cent stake in SIDBI, top IDBI officials said after a meeting here.

"It has been decided that IDBI will hold 49 per cent stake in SIDBI with remaining 51 per cent being held by banks and financial institutions (FIs) including LIC and GIC," IDBI chairman G B Gupta said adding that the price was fixed at Rs. 30 per share.

IDBI is expected to make a capital gain of Rs 460 crore by offloading about 23

crore shares to FIs and banks, likely by the end of this fiscal, official sources said.

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The officials were non-committal on the proportion of stake that FIs and Banks like Life Insurance Corporation, State Bank of India would take in SIDBI, saying a formula was being worked out taking into account the exposure of the respective players in the small scale sector, their deposit growth and other parameters.

According to an earlier report of merchant bankers SBI Capital Markets, the shares were valued between Rs 48-66 per share based on various methods of valuation yield and averaged to Rs 58 per share.

As the share of SIDBI is not listed, SBI Caps said the average price of Rs 58 per share could be discounted by 15 per cent for non-listing, arriving at the fair price of Rs 50.

SBI Caps, it is understood, to have justified the valuation for the primary reason that SIDBI catered to niche sector of small scale industries which account for 35 per cent share in India’s export and about 40 per cent of the manufacturing sector output.

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SIDBI has a net asset base of Rs 16,561 crore with debt-equity ratio of 4.3 and book value of Rs 63.87 as on March 31, 2000 sources said adding SIDBI’s strong fundamentals reflected in low gross and net non-performing assets (NPA) level of 3.82 per cent and 1.33 per cent respectively.

Ranked amongst top 25 development banks in the world, SIDBI is the nodal agency for operation of Government of India schemes for SSI sector including the Technology Upgradation Fund Scheme for Textile and Credit Guarantee Scheme for SSI. Besides, SIDBI is exempted from payment of income tax or any other tax on income, profit or gains.