Industrial Development Bank of India, IDBI has major investments in listed and unlisted companies in India. Yesterday IDBI sold 9 lakh equity shares constituting 2% of the issued and paid up capital of National Stock Exchange of India to MS Strategic (Mauritius) Ltd. for an aggregate sum of USD 50 million.

Even after selling 2% stake in the NSE for USD 50 million (around Rs 200 crore), the bank still has 11% stake (49.5 lakh shares) in NSE, which can be valued at around Rs 1100 crore, based on the above valuations.

Apart from that the bank has investments in SIDBI, NSDL, IFCI, IDFC, ARCIL and its subsidiaries, which are valued at nearly Rs 3772.8 crore.

According KR Choksey report, “The bank has substantial amount of investments in listed and unlisted equities of companies like in NSDL, SIDBI, IFCI, IDFC, ARCIL, NSE to name a few. Market value of few of these investments stands at Rs 3772.8 crore adding Rs 52.2 to the EPS of the bank.” The value of the bank will increase manifold once the bank starts booking profits from these investments.

Valuations of few of the important investments of IDBI

Investments of IDBI
Investments IDBI	Stake (%)	Basis of valuation	Total Value (Rs. cr)	Value per share
SIDBI	19.2	One time FY07 book value	1013.8	14
NSE	13	Recent stake sale in NSE by IFCI	1400	19.4
ARCIL	20	PE multiple of 4x FY07 EPS	29.6	0.4
IDFC *	3.1	Current market value	422.4	5.8
IFCI *	11.7	Current market value	370.8	5.1
Subsidiaries
IDBI Home	100	One time FY07 book value		5
IDBI Capital	100	One time FY07 book value		2.2
IDBI Intech	100	One time FY07 book value		0.1
IDBI Gilts	100	One time FY07 book value		0.1
Total			377.8	52.2

Note: * Market price of IDFC and IFCI taken above for the calculation is Rs.121 and Rs.49.6 respectively as on June 21, 2007. (KR Choksey report)
Company Description

IDBI was set up as a non-banking institution to provide project finance. High funding costs and rising NPLs led to its operations becoming unviable. The government therefore restructured it by a) converting it into a bank b) transferring most of its NPLs to an SPV c) re-pricing its high cost liabilities and d) merging it with a private bank. IDBI is now the fifth largest bank in India, and poised to capitalize on strong growth opportunities in the Indian banking space.

IDBI's principal activities are to provide commercial banking services which include merchant banking, direct finance, infrastructure finance, rehabilitation assistance, venture capital fund, advisory, trusteeship, forex, treasury and other related financial services.