IDBI Bank rises 10% amid talks of selling stake in Arcil

NEW DELHI: Shares of IDBI Bank surged 10 per cent in Friday’s session after a media report suggested it is in talks to sell stake in asset aggregator Arcil. However, the stock pared some gains as trading progressed.

IDBI Bank, which is backed by LIC, is in talks with US-based Avenue Capital to sell its entire 19.18 per cent stake in India’s oldest stressed asset aggregator Asset Reconstruction Co of India (Arcil), as it looks to monetise its non-core investments, ET reported.

However, IDBI Bank CFO Ajay Sharma said it has not initiated discussions with prospective buyers.

Avenue, which currently is the single-largest investor in Arcil, with about 27 per cent, will become the largest stakeholder if the sale gets RBI nod.

“This deal will be part of Avenue’s larger play in India’s distressed asset space, in fact, it is also keen to pick up stakes from other lenders too who own stake in Arcil,” said an official with knowledge of the discussions.

Last year in November, the New York-based $10-billion distressed fund manager Avenue Capital picked up a substantial stake in Arcil and was expecting to buy additional stake from other shareholders such as SBI (holding close to 20 per cent), ICICI Bank (13.26 per cent) and PNB (10.01 per cent).

At 10.13 am, the stock was trading up 5.69 per cent at Rs 39.