IDBI Bank invites bids for its stake in Avenue Capital-backed Arcil

By Beena Parmar

  • 18 Jun 2021
Credit: VCCircle

IDBI Bank has invited bids for around 19% stake in Avenue Capital-backed Asset Reconstruction Company (India) Limited (Arcil) in order to divest its shareholding in the company as part of its non-core asset sale. 

The last date for submission of expressions of interest (EoI) is June 25.

Earlier this year, Punjab National Bank publicly invited potential buyers to buy its 10.01% stake in the country’s oldest ARC

Arcil was incorporated in 2002. New York-based distressed investor Avenue Capital acquired around 27% shareholding in the ARC in November 2018.

Arcil, which purchases bad loans from banks and non-bank lenders, is sponsored by large Indian banks such as State Bank of India (19.95%), IDBI Bank (19.18%) and Punjab National Bank (10.01%). ICICI Bank and its subsidiary ICICI Home Finance together own 15.52% of Arcil. 

Arcil has assets under management (AUM) of around Rs 12,000 crore.

Since its inception, Arcil has resolved over Rs 780 billion (Rs 78,000 crore) worth of non-performing assets (NPAs) acquired from Indian banks and financial institutions, according to its website.

IDBI Bank is controlled by the Life Insurance Corporation of India (LIC) and State Bank of India (SBI). 

The lender recently sold its 23% stake in IDBI Federal Life Insurance to Belgium’s Ageas Insurance International for Rs 507 crore. IDBI Bank continues to hold 25% of the life insurer. 

Last month, it revived the sale process for its asset management company IDBI Mutual Fund which is estimated to fetch around Rs 200 crore. 

It has plans to sell part of its 26% stake in NSDL. 

Last month, the central government gave an in-principle approval for strategic divestment along with transfer of management control of IDBI Bank. 

IDBI Bank was classified as a private sector lender after LIC acquired a majority stake in January 2019.

In March this year, the central bank also lifted the prompt corrective action (PCA) framework invoked against IDBI Bank in May 2017. 

The bank turned profitable after five years when it reported a net profit of Rs 1,359 crore for the fiscal year ended March 2021. For 2019-20, the lender posted a net loss of Rs 12,887 crore. 

In the fourth quarter of 2020-21, the bank reported an almost four-fold jump in net profit at Rs 512 crore year on year.