Governments own property and assets and it is normal for government to be in the business, often times it is because the private sector tends to concentrate on those who have or access to wealth, while the government has to cater to everyone regardless of wealth. Policies are set and if the government is a participant, it can understand the costs and margins business needs to run their businesses. Is it good for the people? good for shareholders? mixture of both? Sometimes governments end up with assets when the private market decides not to be in the business. For example: transit systems were originally privately owned, but the private interests were primarily interested in allowing people access to their lands to be developed. Once the lands were developed there was less interest in running the transit system or eventually it became a public asset.

In an article from Reuters, India’s federal government and state run Life Insurance Corp of India are selling a combined 60.7% state in IDBI Bank. At present the Indian government owns 45.58% and LIC owns 49.24%. Similar to a private equity company, the government has a number or expectations of a number to sell at.

The process has gone through a number of bids and for the government they want to sell, but at the right price. The third revised bids were led by Fairfax Financial Holdings and Emirates NBD.

India has a population of over a billion, with a growing middle-income level and NBD acquired a state in private lender RBI for $3 billion. A Japanese company, MUFG bought a 20% stake in Shriram Finance for $4.4 billion.

IDBI’s stake sale process started in 2022 and has been a slower process because of regulatory and procedural approvals.

Linking to dividend paying stocks, all private companies believe that some government assets are worth buying because private sector cost controls and efficiency levels can be applied to make money for the acquisition. And it is true, if the government owns a stake it tries to appeal to a wide segment of the market, private sector tends to focus on areas where there is growth and higher margins to be found. What is consider good and worthwhile in the government sector is not the same under a private sector viewpoint. Often times if the government is selling, the assets are worth investigating and bidding on.

There are more questions than answers, till the next time – to raising questions.