New Delhi: The Cabinet on Wednesday approved the sale of a 60.72 per cent stake in IDBI Bank to Canada's Fairfax Financial Holdings for Rs 52,878 crore, making it the country's biggest strategic disinvestment since the sale of Air India and potentially opening a new chapter in the privatisation of state-controlled banks.
The decision by the Cabinet Committee on Economic Affairs (CCEA), headed by Prime Minister Narendra Modi, brings to a close a process that has stretched over five years, marking a significant step in the government's efforts to reduce its ownership of state-run assets and attract private capital into the financial sector.
"Once completed, this will be the largest FDI in the financial sector of our economy so far," the government said in a statement.
The successful bidder offered Rs 81 per share, higher than the independently assessed average fair valuation of Rs 75.99 per share, according to the press note.
The proposed sale of a combined 60.72 per cent stake held by the government and LIC would transfer control of the lender to Fairfax, subject to the completion of the transaction and requisite regulatory approvals.
"The CCEA ...approved M/s 10955230 Canada Inc (parent entity M/s Fairfax Financial Holdings Ltd) as the strategic buyer for this transaction for a purchase consideration of Rs 52,877.07 crore for the acquisition of 60.72 per cent stake in IDBI Bank, comprising 30.48 per cent equity held by the GoI and 30.24 per cent by the LIC," the statement said.
GoI and LIC to hold together 34% stake in IDBI
Information and Broadcasting (I&B) Minister Ashwini Vaishnaw also briefed the media about the Cabinet decision on the IDBI Bank's strategic restructuring.
He said the government and Life Insurance Corporation (LIC) will together hold a 34 per cent stake in the restructured entity.
"A major decision has been taken regarding the financial sector, specifically concerning IDBI, an institution crucial for the growth of our MSMEs and new industries. A decision has been made to undertake the strategic restructuring of IDBI," Vaishnaw said during the Cabinet briefing.
Vaishnaw said retaining a minority stake would allow the government and LIC to benefit from the bank's future growth.
"The Government of India and LIC will jointly retain a 34% stake in the restructured entity. Retaining this 34% stake will significantly enhance the value of the holdings held by both the Government of India and LIC," he said.
Deal to be completed by end of current fiscal
Department of Investment and Public Asset Management (DIPAM) Secretary Arunish Chawla said the deal will be completed before the end of the current fiscal.
Fairfax will have to also make an open offer to the minority shareholders.
Fairfax, which holds a stake in CSB, will have to either merge it with IDBI Bank or exit the holding within two years.
The transaction follows an earlier unsuccessful bidding round in 2025-26, when initial offers fell short of the reserve price of Rs 94.42 per share. The government subsequently invited revised offers from qualified bidders.
The Cabinet has also authorised the sale of the government's remaining 15 per cent shareholding through the open market. LIC will be free to manage its residual 19 per cent stake in accordance with its internal procedures and regulatory requirements.
(With inputs from PTI & ANI)
