Cabinet Approves Fairfax Bid of Rs 52,878 Crore for 60.72% of IDBI Bank

The Cabinet Committee on Economic Affairs approved on 14 October the sale of a combined 60.72 percent stake in IDBI Bank to a Fairfax Financial Holdings subsidiary for Rs 52,878 crore.

The buyer is 10955230 Canada Inc., a wholly owned entity of the Canadian firm. The government will sell its 30.48 percent holding and Life Insurance Corporation of India will sell its 30.24 percent holding. After the transaction the government will retain 15 percent and LIC about 19 percent, for a combined residual stake of 34 percent.

The winning bid was Rs 81 per share. That price exceeded the Rs 75.99 per share benchmark derived from the average of two independent valuations. DIPAM Secretary Arunish Chawla said the offer was judged reasonable and above both the benchmark and the fair-value estimates. The process began with expressions of interest in 2022. Five parties initially showed interest; four qualified and two submitted final bids.

Finance Minister Nirmala Sitharaman described the transaction as the largest foreign direct investment yet in India's financial sector. Officials expect completion in the current fiscal year. The buyer must still obtain Reserve Bank of India fit-and-proper clearance and satisfy other regulatory conditions, including an open offer to minority shareholders. Fairfax already holds a substantial stake in CSB Bank; RBI rules on dual control of Indian banks will require resolution of that position within a defined period.

The approval advances a privatisation process first cleared by the Cabinet in 2021. IDBI Bank had been under RBI prompt corrective action restrictions in earlier years before returning to profitability. The sale transfers management control while leaving the sellers with significant minority holdings that officials say will benefit from any future value creation.

The deal ranks among the largest strategic disinvestments by the Centre since the Air India sale. It supplies fresh capital and a private owner for a bank that has operated under partial government control for years. Completion remains subject to the remaining regulatory steps; the share purchase agreement has not yet been signed.

Market reaction on the day of the announcement was positive for IDBI shares, which had traded in a wide range during the valuation period. The transaction, once closed, will reduce the government's direct ownership in commercial banking and set a reference point for any further bank privatisations.