New Delhi, Oct. 14 -- Canada-based Fairfax Financial Holdings will acquire a 60.72 per cent stake in IDBI Bank for approximately Rs 53,000 crore, marking the largest foreign investment in an Indian bank and a significant step towards the country's banking privatisation programme.
The Cabinet Committee on Economic Affairs (CCEA) has approved Fairfax subsidiary 10955230 Canada Inc as the strategic buyer for the government's 30.48 per cent stake, valued at Rs 26,620 crore, and Life Insurance Corporation of India's (LIC) 30.24 per cent holding, worth Rs 26,440 crore.
Led by Canadian billionaire Prem Watsa, Fairfax will pay Rs 81 per share, above the benchmark fair value of Rs 75.99 determined by two independent valuation agencies, according to an official statement.
Finance Minister Nirmala Sitharaman called the transaction a milestone, saying the government was preparing the bank for its next phase of growth after supporting its recovery.
"Having supported the bank's recovery, we are now enabling its next phase of growth through the infusion of Foreign Direct Investment while retaining a minority stake," she said.
The deal follows a lengthy divestment process that began in 2022 and encountered difficulties over valuation. Initial bids from Fairfax and Emirates NBD in February 2026 fell below the government's reserve price, delaying the sale before revised offers were considered. IDBI Bank shares rose 9.07 per cent to close at Rs 90.44 on the BSE on Wednesday following the announcement.
The transaction requires approval from the Reserve Bank of India (RBI), the Competition Commission of India and other statutory authorities. Fairfax must undergo the RBI's fit-and-proper assessment and submit a roadmap for meeting regulatory requirements. It must also make an open offer to public shareholders unless the Securities and Exchange Board of India grants an exemption.
Under RBI rules, bank promoters cannot hold more than 26 per cent. Fairfax will have up to 15 years to meet this requirement, with a five-year lock-in period for the promoter. Since Fairfax already owns 40 per cent of Kerala-based CSB Bank, it must either merge the lender with IDBI Bank or exit its investment.
The new promoter must retain IDBI Bank's name, brand and customer relationships for at least three years. Department of Investment and Public Asset Management Secretary Arunish Chawla said employees need not worry, adding that the transfer of management had been discussed with stakeholders.
LIC must also reduce its holding in IDBI Bank from 19 per cent to 15 per cent within two years. The transaction is expected to conclude before the end of the 2026-27 financial year, after which the government will exit the bank's board.
The deal could provide a model for privatising other state-owned lenders while testing investor appetite for acquiring control of Indian banks under stringent regulatory requirements.
Published by HT Digital Content Services with permission from Millennium Post.