TPG Said to Vie for Stake in India's State-Owned IDBI Bank

TPG Capital is among investors vying to acquire a stake in Indian state-owned lender IDBI Bank Ltd., people with knowledge of the matter said.

The lender has reached out to potential investors including private equity firms and multilateral institutions, one of the people said, asking not to be identified as the information is private. A formal process for the stake sale hasn’t started yet, according to the people.

IDBI Bank is seeking to bolster its balance sheet after recording bad debts that totaled 8.94 percent of its loans at the end of December. TPG would like to invest $1 billion annually in India over the next three years if it can find the right investments, co-founder Jim Coulter said in a Wednesday interview.

Shares of IDBI Bank rose as much as 3.2 percent Thursday to 67.75 rupees. It was trading up 1.2 percent to 66.45 rupees at 3:21 p.m. in Mumbai.

The Indian lender appointed advisers including Bank of America Corp., Citigroup Inc. and Credit Suisse Group AG to arrange a share sale of as much as 37.7 billion rupees ($564 million), people with knowledge of the matter said earlier. IDBI Bank has approached the World Bank’s International Finance Corp. about a potential investment, the people said at the time.

TPG declined to comment in an e-mail, while IDBI Bank Chief Financial Officer N.S. Venkatesh said he couldn’t comment.

IDBI Bank won government approval in December to sell stock to institutional investors. The Indian government owns 80.2 percent of the bank, according to exchange filings.

TPG in 2004 considered acquiring Global Trust Bank Ltd., a lender based in south India, through its affiliate fund Newbridge Capital, one of the people said. Later that year, Global Trust Bank was ordered to cease business and merged with state-run Oriental Bank of Commerce after bad loans depleted its capital.

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