The Union Cabinet approved the sale of a 60.72% stake in IDBI Bank to Fairfax Financial Holdings’ subsidiary, M/s 10955230 Canada Inc., for Rs 52,878.08 crore. The transaction includes the government’s 30.48% stake and Life Insurance Corporation of India’s 30.24% holding. After the deal, the government and LIC will retain a combined 34% stake in the bank, the government said on Wednesday, according to bfsi.economictimes.indiatimes.com.
The strategic sale followed a two-stage competitive bidding process managed by multiple government bodies, including the Inter-Ministerial Group and the Core Group of Secretaries on Disinvestment. The government issued a preliminary information memorandum in October 2022, inviting expressions of interest. Five parties initially showed interest, four qualified, and two submitted technical and financial bids. Fairfax’s Canadian subsidiary was approved as the strategic buyer by the Cabinet Committee on Economic Affairs, the official press note said.
This transaction will be the largest foreign direct investment in India’s financial sector, Union Minister Ashwini Vaishnaw stated. The deal marks a major restructuring of IDBI Bank, which has seen significant government and LIC holdings. The sale aligns with government efforts to reduce direct ownership in public sector banks and attract private capital, following similar disinvestment moves in recent years. The deal’s scale and competitive bidding process underscore its significance in India’s banking sector reforms.
The government will retain a 15% stake in IDBI Bank post-transaction, while LIC will hold 19%. The Cabinet Committee on Economic Affairs gave final approval on Wednesday, setting the stage for completion of the transaction. The deal’s value and strategic importance make it a landmark financial-sector foreign investment in India.