IDBI Bank Stake Sold for ₹52,878 Crore
The Cabinet approves Fairfax's bid for a 60.72% stake in IDBI Bank, while the government and LIC will retain minority holdings pending regulatory clearance.
The Union Cabinet has approved the sale of a 60.72% stake in IDBI Bank to 10955230 Canada Inc., a subsidiary of Fairfax Financial Holdings, for approximately ₹52,878.08 crore. The decision marks a major step in the government's strategic disinvestment of the lender, although the transaction remains subject to regulatory requirements.
The stake being sold comprises 30.48% held by the Government of India and 30.24% held by Life Insurance Corporation of India (LIC). After the transaction, the government is expected to retain a 15% holding in IDBI Bank, while LIC will retain 19%.
Fairfax's winning offer was ₹81 per share, above the benchmark valuation of ₹75.99 per share established through two independent valuation exercises. The government said the valuation process used the Market Multiple Method, based on the financial performance of public sector banks, and the Asset Valuation Method, which considered tangible and intangible assets as well as liabilities.
The strategic sale process began in 2022, when the government invited expressions of interest from potential buyers. Five parties initially expressed interest, four met the eligibility requirements and two ultimately submitted qualified financial bids.
The successful bidder must present its credentials to the Reserve Bank of India for the applicable fit-and-proper assessment and provide a roadmap for complying with regulatory conditions. The transfer of the stake will be completed only after the necessary approvals and formalities are fulfilled.
IDBI Bank has undergone a significant financial turnaround after facing substantial non-performing assets and losses. The Reserve Bank of India placed the bank under the Prompt Corrective Action framework in 2017, before lifting restrictions in 2021 subject to conditions and continued monitoring.
The government has described the transaction, once completed, as the largest foreign direct investment in India's financial sector to date. The Cabinet has also authorised a mechanism to undertake a possible open-market sale of the government's remaining 15% stake in accordance with the prescribed procedure. LIC will manage its residual holding under its internal procedures and applicable regulations.
The proposed change in ownership could shape IDBI Bank's future strategy, capital allocation and expansion plans. However, the impact will depend on the final completion of the transaction and the approach adopted by the new controlling shareholder.