KPMG India has been appointed as the transaction adviser for strategic divestment of IDBI Bank, and the firm will assist the government in the sale for Re 1.
About 7 firms, including KPMG, had bid to act as transaction advisor for IDBI Bank strategic divestment. These were Deloitte Touche Tohmatsu India LLP, Ernst and Young LLP, ICICI Securities, JM Financial？Ltd, KPMG, RBSA Capital Advisors LLP and SBI Capital Markets.
KPMG placed the lowest bid of Re 1, and was selected as the transaction adviser, said an official.
The near-zero bid could make KPMG one of the largest players in managing deals in the financial services space if IDBI Bank sale is a success, said another official.
KPMG's presence in India is already strong and well known in the financial services space, the firm said in response to Business Standard's queries. "With regards to the IDBI bank sale, DIPAM is running the process for selecting a transaction advisor. Hence we would refrain from commenting on the ongoing process," KPMG said.
Firms have been placing near-zero bids to manage privatisation of large public sector undertakings as a means to improve their portfolios and establish credentials in respective sectors. Deloitte had recently bid Re 1 to manage the privatisation of Bharat Petroleum Corporation (BPCL), and was appointed as the transaction adviser.
KPMG would be required to advise the government on the modalities and the timing of the strategic disinvestment of IDBI Bank, and prepare a scheme to successfully implement the sale. It will have to execute a non-disclosure agreement and provide appropriate information to bidders. Besides this, KPMG will finalise the sale process through bidding or auction, and assist the government in fixing the reserve price considering the valuation of IDBI Bank.
The government is looking to sell its 45.48 per cent shareholding in IDBI Bank. Life Insurance Corporation of India (LIC), which owns 49.24 per cent, will also offload its stake to transfer management control to the new buyer.