The buyer whom the government and LIC were looking for for IDI Bank for a long time has probably been found. People with knowledge of the matter said that after Canadian company Fairfax Holdings improved its offer, the government has selected it to sell its stake in IDBI Bank.
This decision was taken after meetings held in the Finance Ministry on Tuesday. According to the ET report, Fairfax is now offering Rs 81 per share, which is more than the offer of Rs 75 given last year. At this price, the government can raise about Rs 26,620 crore by selling 30.48% of its 45.48% stake in the bank.
Government company Life Insurance Corporation (LIC), which holds a little less than 50 per cent stake in the bank, is also planning to sell 30.24 per cent stake. This will take the total size of the deal to Rs 53,000 crore ($5.5 billion) and will be the largest ever foreign investment in an Indian bank. Prem Vatsa’s Fairfax Holdings will also have to make an open offer to public shareholders.
Many approvals will be required
The ET report quoted experts as saying that after much negotiation, the government and Fairfax have agreed to the deal and its official announcement can be made any time. Another person with knowledge of the matter said an empowered group of ministers, including Finance Minister Nirmala Sitharaman, has been briefed about the revised bids and subsequent developments. A formal notification will come soon and after that a ‘Letter of Intent’ will be issued, after which the share-purchase agreement will be signed.
Shares increased by about 3 percent
Responding to a question from BSE in the information given to the stock exchange late in the evening, the bank said that it is “neither in a position to confirm nor deny” the news related to its disinvestment. On the other hand, no official statement has come out from Fairfax. On Tuesday, the bank’s shares closed at Rs 86.54 on NSE, which was 2.9 percent higher than the previous closing price. The shares have gained nearly 42 per cent since hitting a 52-week low of Rs 61.01 on March 31.
At that time, the government had stopped the sale process after bids received less than the reserve price. The successful bidding company will have to undergo a final valuation process by the Reserve Bank of India (RBI) to ensure that it meets the regulator’s ‘fit and proper’ standards. Apart from this, approval will be required from legal and regulatory authorities including CCI.
40 percent stake in CSB Bank
Fairfax’s Indian unit currently holds 40 percent stake in CSB Bank. An executive of the banking sector said that the promoters will have to merge these two banks, although RBI may give some more time. The largest foreign investment in a bank so far has been Emirates NBD buying 60% stake in RBL Bank for $2.75 billion in 2025. Emirates NBD had also bid for IDBI Bank along with Fairfax Holdings in February. The process was stopped in March because the offers were below the reserve price (which was confidential). Media reports had earlier stated that the government was examining legal provisions and the stake sale process was never “canceled” despite the financial bids being lower than the reserve price.
LIC had bought the stake
IDBI was given the status of private sector bank in 2019 after LIC bought 51 percent stake (controlling stake) in the bank for Rs 21,624 crore. The country’s largest insurance company will get approximately Rs 26,440 crore from this deal. The government has kept a budget of Rs 80,000 crore from asset monetization in this financial year. So far, it has raised about Rs 20,272 crore mainly by selling its stake in companies. The government is also considering selling stake in other companies including LIC and Coal India.
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