Disinvestment: KPMG to charge Re. 1 to help government sell IDBI Bank
Virendra Pandit
New Delhi: The Centre has appointed KPMG India as the transaction adviser to manage the strategic disinvestment of IDBI Bank for which the multinational accounting and advisory firm will be paid a token fee of only one rupee.
Earlier, another multinational firm Deloitte had, similarly, charged Rupee 1 for managing divestment of oil marketing major Bharat Petroleum Corporation Ltd (BPCL).
When the government invited bids recently, KPMG placed the lowest bid of Re 1, prompting the Centre to select it as the transaction adviser, media reported on Thursday.
If the IDBI Bank sale deed goes through, the near-zero bid could make KPMG one of the largest players in managing deals in the financial services space.
According to reports, seven firms, including KPMG, had bid to act as transaction advisors for IDBI Bank’s divestment. They were Deloitte Touche Tohmatsu India LLP, Ernst and Young LLP (E&Y), JM Financial Ltd, RBSA Capital Advisors LLP, SBI Capital Markets, and ICICI Securities.
Global accounting firms like the Big Four—KPMG, E&Y, Deloitte, and PwC—sometimes place such near-zero bids to manage privatisation of large public sector undertakings. It improves their portfolios and establishes credentials in respective sectors.
With its selection for the task, KPMG will advise the government on the modalities and the timing of the strategic disinvestment of IDBI Bank, and prepare a schedule, timeline, and scheme to successfully implement the sale.
Besides, it will execute a non-disclosure agreement and provide requisite information to the bidders. KPMG will finalize the sale process through bidding or auction, and assist the government in fixing the reserve price considering the valuation of IDBI Bank.
The government plans to sell its 45.48 per cent shareholding in IDBI Bank while the Life Insurance Corporation of India (LIC) will also offload its 49.24 percent stake to transfer the management control to the new buyer.
