Canadian billionaire Prem Watsa's Fairfax Financial Holdings is set to acquire a 60.72% stake in IDBI Bank for ₹52,878 crore ($5.6 billion), marking a major foreign investment in India's banking sector.
Department of Investment and Public Asset Management Secretary Arunish Chawla said the transaction values the Mumbai-based lender at approximately ₹87,100 crore.
The deal represents an 11% discount to IDBI Bank's Wednesday closing share price of ₹90.40.
Following the sale, the Government of India and Life Insurance Corporation of India (LIC) will retain a combined 34% stake.
Acquisition Strengthens Disinvestment Programme
The transaction marks progress in the government's long-running efforts to reduce its ownership in IDBI Bank.
Earlier attempts faced regulatory delays and disagreements over valuation.
Fairfax had previously submitted a bid below the government's reserve price before reportedly considering an improved offer.
The acquisition follows growing foreign interest in India's financial services industry.
Japanese financial institutions, including Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group, have also expanded their investments in Indian banks.
The Centre is targeting ₹80,000 crore through asset sales during the current financial year.
Proceeds from the IDBI transaction could provide substantial support to this disinvestment objective.
The government has also been exploring measures to strengthen banking capacity, including greater foreign participation and potential consolidation among public sector lenders.
Fairfax Faces CSB Bank Stake Decision After IDBI Acquisition
The acquisition significantly expands Fairfax's Indian financial services portfolio.
The investment group already holds interests in CSB Bank and IIFL Capital Services.
According to Chawla, Fairfax must merge or exit its 40% holding in CSB Bank within two years of signing the IDBI Bank share purchase agreement.
The requirement addresses the group's overlapping banking investments.
IDBI Bank has undergone a financial turnaround after previously struggling with substantial non-performing assets.
Capital support, recoveries and balance sheet improvements have helped the lender restore profitability.
The proposed ownership change comes as India seeks greater investment in its banking system to support economic expansion.
The government aims to develop India into a $30 trillion economy by 2047, with stronger bank financing expected to play an important role.
The transaction also comes amid efforts to strengthen public finances as geopolitical tensions and higher energy costs create additional fiscal pressures.
