The government is looking for a valuation of Rs 640 billion ($7.7 billion) for IDBI Bank, which will be a premium of almost 33% based on the lender’s market value of about $5.8 billion on Thursday’s close.

Earlier this month, the government invited bidders for a 60.72% stake in IDBI Bank.

IDBI Bank’s improved profitability could support the valuation target, Bloomberg quoted a source as saying.

Potential investors ranging from domestic and foreign banks to non-banking financial companies (NBFCs) and private equity funds have expressed initial interest in the asset, the person added.

Bidders could get regulatory approvals and security clearances after November as the process proceeds, Bloomberg reported quoting the source. A sale of the majority stake could be completed as soon as in the next fiscal year starting from April 1, the person added. 

The government and the state-owned Life Insurance Corp. of India (LIC) together own about 95% in IDBI Bank.

IDBI Bank, which had the highest bad-loan ratio among banks in India, was put under the RBI’s prompt corrective action (PCA) framework in 2017. LIC acquired 51% stake in 2019 under the government’s bailout plan. As the bank turned around, RBI put it out of the PCA list last year.