The Union Cabinet has approved the sale of a 60.72% controlling stake in IDBI Bank to Fairfax Financial Holdings for ₹52,878 crore, marking one of India’s biggest strategic disinvestment transactions.
New Delhi, October 14 — The Cabinet Committee on Economic Affairs (CCEA) has approved the sale of a 60.72% controlling stake in IDBI Bank to Fairfax Financial Holdings for ₹52,878 crore, bringing the long-running strategic disinvestment process closer to completion.
The government said the transaction, once completed, would become the largest foreign direct investment in India’s financial sector so far. The decision represents a major step in the government’s strategy to reduce its ownership in state-controlled assets and bring greater private capital into the banking sector.
Under the approved transaction, 10955230 Canada Inc, whose parent entity is Fairfax Financial Holdings Ltd, will acquire the 60.72% stake for a purchase consideration of ₹52,877.07 crore.
The stake being sold comprises 30.48% held by the Government of India and 30.24% held by Life Insurance Corporation of India. The transaction will result in transfer of management control to Fairfax, subject to completion of the deal and required regulatory approvals.
Following the strategic sale, the government and LIC will together retain a 34% stake in the restructured IDBI Bank.
Department of Investment and Public Asset Management Secretary Arunish Chawla said the transaction is expected to be completed before the end of the current financial year.
Fairfax will also be required to make an open offer to minority shareholders in accordance with applicable regulations.
The Canadian financial group already holds a stake in CSB Bank. According to the approved framework, Fairfax will have to either merge its CSB Bank holding with IDBI Bank or exit the investment within two years.
The deal is being described as the country’s biggest strategic disinvestment since the sale of Air India and could set an important precedent for future privatisation efforts involving state-controlled financial institutions.
