IDBI Bank Stake Sale: Centre May Approve Fairfax Bid For 60.72% Stake Within A Week

The Centre could approve Fairfax Financial Holdings’ revised proposal to acquire a 60.72% stake in IDBI Bank within the next week, potentially bringing an end to the lender's five-year-long strategic sale process.

Canada-based Fairfax and Dubai's Emirates NBD submitted revised financial bids last month after their initial offers failed to meet the government's reserve price.

According to a report by Financial Express, an in-principle decision has already been taken, with officials working on the timing of the announcement.

Fairfax bid could revive long-delayed sale

The proposed transaction has attracted investor attention, with IDBI Bank shares rising 6.89% to ₹87.93 on the BSE on Monday.

The sale process was temporarily halted in March after bids from Fairfax and Emirates NBD came in below the reserve price. Fairfax, led by billionaire Prem Watsa, subsequently raised its offer marginally in the revised bid.

The government then explored alternative valuation approaches to better reflect the bank's underlying value rather than relying largely on prevailing market prices.

The Centre and Life Insurance Corporation of India (LIC) are jointly divesting the stake. The government owns 45.48% of IDBI Bank, while LIC holds 49.24%. Under the transaction, the government would sell 30.48% and LIC would divest 30.24%.

Deal could be major foreign investment in banking

At Monday's closing price, the stake being offered is worth approximately ₹56,500 crore, or around $6.1 billion. If completed, the transaction could rank among the largest foreign investments in India's banking sector.

The privatisation process began in 2021 but encountered several regulatory and procedural delays. IDBI Bank has since undergone a significant turnaround, supported by capital infusion, improved asset quality and sustained profitability.

The potential deal comes amid rising foreign interest in India's financial sector, with overseas banks recently acquiring stakes in Indian lenders and financial companies.

The government is also considering increasing the foreign investment limit in public sector banks from 20% to 49%, potentially making future bank privatisations more attractive to overseas investors.