Fairfax gets nod to acquire 60.72% stake in IDBI Bank for Rs 52,878 crore

The Indian government has approved Fairfax Financial Holdings’ proposal to acquire a 60.72% stake in public sector lender IDBI Bank for Rs 52,878 crore, taking forward the Centre’s plan to transfer control of the lender to a private investor. 

Fairfax has been selected as the strategic buyer through its wholly owned subsidiary, 10955230 Canada Inc., at a bid price of Rs 81 per share, a statement said.

The transaction, once completed, is expected to be India’s largest foreign investment in the financial sector.

"We assure the Government of India that we are committed to building the world’s finest financial institution from India," said Prem Watsa, chairman and CEO, Fairfax Financial Holdings Ltd, "This transaction represents a once-in-a-lifetime opportunity to purchase a majority interest in a bank in one of the world’s fastest growing economies and to combine it with a successful and growing insurance company and an established provider of investment banking and wealth management services in the same jurisdiction," he added.

The proposed acquisition is subject to regulatory clearances, including approval from the Reserve Bank of India (RBI). Fairfax will also have to make an open offer to IDBI Bank’s minority shareholders. 

Fairfax has also proposed bringing its interests in Go Digit Life Insurance, Go Digit General Insurance and IIFL Capital Services under IDBI Bank. The plan aims to create an integrated financial services business covering banking, insurance, investment banking and wealth management. The proposed combination will require separate regulatory approvals and may proceed independently of the stake acquisition.

The acquisition also has implications for Fairfax’s existing investment in CSB Bank. Fairfax will be required to either merge its interest in the lender with IDBI Bank or exit that holding within two years.