Fairfax to buy 60.72% stake in IDBI Bank for Rs 52,878 crore

The Cabinet Committee on Economic Affairs (CCEA) on Wednesday approved Canada-based Fairfax Financial Holdings Ltd. as the strategic buyer for a 60.72% stake in IDBI Bank for approximately Rs52,878.08 crore. The transaction comprises the sale of a 30.48% stake held by the Government of India and a 30.24% stake held by Life Insurance Corporation of India. Following the sale, the government will retain 15% and LIC 19% in the bank. The winning offer of Rs81 per share exceeded the benchmark valuation of Rs75.99 per share and the individual fair-value estimates of both independent valuation agencies, the government said.
The successful bidder will be required to present its credentials to the Reserve Bank of India in accordance with the fit-and-proper assessment conducted at the expression-of-interest stage and submit a roadmap for complying with the regulatory conditions. Once completed, the transaction will be the largest foreign direct investment in India’s financial sector to date. The sale followed a two-stage competitive bidding process overseen by an Inter-Ministerial Group, the Core Group of Secretaries on Disinvestment and an Alternative Mechanism comprising an empowered group of Cabinet ministers.
The Finance Ministry invited expressions of interest on October 7, 2022. Five parties initially applied, of which four met the prescribed eligibility requirements. Two ultimately submitted technical and financial bids and became qualified bidders. Participation in the bidding stage required an RBI fit-and-proper assessment and security clearance from the Ministry of Home Affairs."Once completed, this will be the largest FDI in the financial sector of our economy so far," the statement added. Fairfax, which holds a stake in CSB Bank, will have to either merge it with IDBI Bank or exit the holding within 2 years. Fairfax will have to also make an open offer to the minority shareholders of IDBI Bank.