India approves Fairfax $5.5bn IDBI Bank stake purchase
The Indian government has approved a $5.5 billion stake sale in IDBI Bank to Fairfax Financial, marking the largest foreign investment in the country's banking sector and a pivotal test for New Delhi's privatisation agenda.
India's government has approved the sale of a majority stake in IDBI Bank to Canadian investor Prem Watsa's Fairfax Financial. The state and the Life Insurance Corporation (LIC) will offload roughly 30% each, bringing the total transaction to Rs 53,000 crore. "Fairfax is now offering Rs 81 per share, which is higher than their offer of Rs 75 given last year," a person familiar with the matter said.
At the revised price, the government stands to raise approximately Rs 26,620 crore from the divestment of its 30.48% holding. LIC plans to sell a 30.24% stake concurrently. Together, the Centre and the state-run insurer currently control more than 94% of the lender, holding 45.48% and 49.24% respectively.
Markets responded positively to the news, with IDBI Bank shares climbing to Rs 88.99 on Wednesday morning. The stock has gained 10% over the past week and 15% over the past month. However, the shares are still down more than 15% in 2026 so far and 10% over a 12-month period, despite delivering 53% returns over three years and 132% over five years.
Strategic milestone
The transaction represents the largest foreign investment in an Indian bank to date. It follows in-principle approval granted by the Cabinet Committee on Economic Affairs in May 2021 for the lender's strategic disinvestment and management transfer. For market participants, finalising this sale is a key test case for whether state-led strategic sales in the banking sector can overcome regulatory and valuation hurdles.
Competitive landscape
Fairfax secured the mandate after a bidding process that included Emirates NBD, while Kotak Mahindra Bank clarified in February that it did not participate. Handing management control to a foreign investor could significantly alter IDBI Bank's operational focus. More broadly, successfully closing this $5.5 billion deal establishes a structural benchmark for future privatisations across India's financial sector.
