India's government has finalized the sale of IDBI Bank to Fairfax Holdings after the Canadian firm sweetened its offer, with the decision made Tuesday after back-to-back meetings at the finance ministry. According to The Economic Times, Fairfax is now offering ₹81 per share, which is higher than their offer of ₹75 given last year. At this price, the government could raise around ₹26,620 crore by selling a 30.48% stake out of the 45.48% it holds in the bank. The Core Group of Secretaries on Disinvestment (CGD) met twice during the day to deliberate on the strategic sale, with the Inter-Ministerial Group (IMG) also meeting to review the transaction. The meetings were attended by Department of Investment and Public Asset Management (DIPAM) Secretary Arunish Chawla, Department of Financial Services (DFS) Secretary Sanjay Lohiya and other senior government officials. As per The Economic Times, "After much discussion, the government and Fairfax have agreed to shake hands and the official announcement could be made anytime now," a person familiar with the matter said.
The total deal size will reach ₹53,000 crore ($5.5 billion) and make it the biggest foreign investment in an Indian bank, as reported by The Economic Times. State-run Life Insurance Corporation that owns just under 50% in the bank is also planning to sell 30.24%, which will take the total deal size to the record-breaking figure. The successful bidder will have to make an open offer to the public shareholders and undergo final assessment by the Reserve Bank of India to ensure it meets the regulator's 'fit & proper' standards. Fairfax's ₹5,300 crore investment in IDBI Bank will require the Prem Watsa-owned firm to make an open offer to public shareholders. Several approvals will be needed from statutory and regulatory authorities, including the CCI, with the RBI also requiring final clearance. The biggest foreign investment in a bank so far has been Emirates NBD's purchase of a 60% stake in RBL Bank for $2.75 billion in 2025, but Fairfax's IDBI Bank stake acquisition is likely to top that record.
Fairfax Financial Holdings likely purchased nearly half of the three-year government bond paper auctioned Friday in what is seen as a prelude to acquiring a stake in IDBI Bank, according to The Economic Times. The Toronto-based company bought ₹5,000 crore in the 6.03% GS 2029 paper, which had a notified amount of ₹11,000 crore in Friday's auction. This marks the second significant bond purchase by the Prem Watsa-owned company in less than two months, following a ₹9,600 crore government securities purchase in June. "They (Fairfax) are not a usual market participant, and the purchase is just a way to move capital into India ahead of a potential acquisition," said a person aware of the matter. Fairfax needs to have around $5.5 billion, or ₹52,580 crore, available in India to fund the acquisition when the transaction closes. Another person noted that Fairfax has been buying Indian government bonds in the shorter tenure segment over a couple of months, and would likely sell these when clarity on the IDBI Bank process emerges.
The strategic sale has progressed through multiple stages after over three years of pursuance, reaching the final stage of financial bids in January 2023. In October 2022, the government and LIC had invited Expression of Interest (EoI) for selling 60.72% stake in IDBI Bank, with the Centre and LIC looking to pare 30.48% and 30.24% stake, respectively. Following multiple preliminary bids received in January 2023, the bids were sent for security clearance from the Ministry of Home Affairs (MHA) and for the 'Fit and Proper' assessment from the RBI. The shortlisted bidders who received both clearances later undertook due diligence of the bank, and the government invited financial bids in January 2023. In February 2023, the government announced that it received financial bids for IDBI Bank, with the current development marking the final stage of the sale process. However, the bids were below the reserve price fixed by the inter-ministerial group, prompting the government to put the process on hold until revised bids were invited.
IDBI Bank shares jumped around 3% on Wednesday after the government finalized the Fairfax deal, with the stock reaching ₹88.99 apiece in morning trading. The shares have gained around 10% in one week and 15% in one month, though they are down more than 15% in 2026 so far and 10% in one year. In the longer term, the shares have delivered 53% returns over three years and 132% over five years. The proposed transaction assumes significance as the government seeks to step up capital receipts in FY27, with the Centre aiming to mobilise ₹80,000 crore from disinvestment and asset monetisation in the Union Budget for 2026-27. The government has budgeted ₹80,000 crore from asset monetisation this fiscal year, so far raising around ₹20,272 crore, largely by selling its stake in companies. The government has been working to reduce its stake in IDBI Bank as part of a broader privatisation and asset-monetisation agenda, with the divestment seen as a key test case for strategic sales in the banking sector.
