IDBI Bank Disinvestment Revives As Fairfax Submits Fresh Bid Of $5 Billion

The long-stalled disinvestment of IDBI Bank has regained momentum following renewed discussions between Canadian billionaire Prem Watsa-led Fairfax India Holdings and DIPAM.

According to a report by Moneycontrol, Fairfax has submitted a revised bid and also proposed positioning IDBI Bank as its primary anchor investment in India’s financial services sector.

The divestment process, which had stalled in February after earlier bids from potential buyers failed to progress, now appears to be back on track.

According to the report, revised proposal is currently under review and the deal trajectory is moving in a positive direction.

While an exact timeline has not been finalised, the transaction could be completed by September, although it may conclude even earlier depending on regulatory and procedural clearances.

A Reuters report dated June 23 noted that entities linked to Fairfax recently purchased around $1 billion worth of Indian government securities, which is being interpreted by market participants as a potential capital positioning move ahead of a major banking acquisition.

The deal, if completed, is expected to generate approximately ₹50,000 crore (over $5 billion) for the Government of India and Life Insurance Corporation (LIC), the two principal shareholders of IDBI Bank.

Fairfax is believed to have quoted a price of around ₹77 per share, implying a valuation of nearly 1.2 times book value based on trailing 12-month financials.

This is broadly in line with the bank’s current market valuation metrics, as IDBI Bank was trading at ₹86.95 per share, with a market capitalisation of about ₹93,500 crore.

Fairfax has assured it will treat IDBI Bank as its sole banking investment in India.

In line with Reserve Bank of India regulations that prohibit holding multiple banking licences, Fairfax is expected to divest its stake in CSB Bank once the IDBI acquisition is completed.

Fairfax currently holds around 40% in CSB Bank, which it had previously rescued in 2018 by acquiring a controlling stake when the lender was struggling financially. CSB Bank was subsequently listed in 2019.

Given IDBI Bank’s significantly larger scale compared to CSB Bank, Fairfax is expected to prioritise the former as its long-term banking asset in India.