DIPAM Unveils Flexible Bidding Guidelines for Strategic Disinvestment
The Department of Investment and Public Asset Management (DIPAM) has initiated the first bid round for strategic disinvestment during the financial year 2025-26. This process, following DIPAM’s internal practices, emphasizes flexibility rather than rigid guidelines. The aim is to adapt the bidding procedures to ensure the successful and timely execution of transactions, especially given their complex nature.
A press note dated October 14, 2026, clarifies that there is no predetermined benchmark for bids. Instead, bidders are responsible for conducting their own valuations and submitting confidential bids. To maintain fairness, independent agencies are engaged to provide current valuations of enterprises, which serve as a benchmark for assessing bid reasonableness. The price determined through the bidding process may vary in comparison to these valuations.
Bid Evaluation Process and Strategic Oversight
To tackle potential discrepancies, specific provisions are outlined in the Request for Proposal (RFP). If the highest bid falls below the reserve price, the Government of India (GoI) retains the authority to decide the subsequent course of action, which cannot be contested by qualified bidders.
There is no set procedure within DIPAM for these instances, so the Cabinet Committee on Economic Affairs (CCEA) has empowered a Core Group of Secretaries on Disinvestment (CGD) with special powers. This delegation came about during a CCEA meeting on August 16, 2017, where they approved a mechanism for handling strategic disinvestments, allowing the CGD to take necessary deviations to ensure effective transaction implementation.
Independent Valuation Methods for Transparency
The CGD exercised its authority to set the process for the second bidding round, confirming that the reserve price would remain unchanged after the first round’s bids were not approved. The valuation methodology underwent a comprehensive review in April 2026, prior to the invitation for the best offer bids. Bids and valuations were handled through a double-blind process to ensure impartiality—bidders were unaware of the valuations while valuators had no access to the submitted bids.
Independent advisors employed various methodologies for valuation, applying the Market Multiple Method. They focused on the Comparable Companies Method due to the absence of suitable comparable transactions. Notably, IDBI was designated as a government ‘controlled’ banking entity after LIC acquired a majority stake in 2019, although it was treated as a private bank by the RBI for regulatory purposes.
Maximizing Value for Government Investments
The Asset Valuer incorporated established methodologies, including assessments for disputed tax demands to encourage higher bid offers. Although this involved a low-probability approach, it has proven revenue-neutral for the government. The potential tax liability was merely Rs. 627 crores, while the bids received exceeded expectations, boosting the transaction’s value by Rs. 3,917 crores for the GoI and LIC.
Further details regarding IDBI’s stock price fluctuations and their implications are available in the October 14, 2026 press note. The GoI and LIC maintain their residual shareholdings, positioning themselves to benefit from anticipated value increases stemming from IDBI Bank’s strategic restructuring in the future.
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