Largest foreign investment in the Indian banking sector: Fairfax set to acquire stake in IDBI Bank; government coffers to swell

The path has finally been cleared for the sale of the government’s stake in IDBI Bank. The government has approved the offer made by the Canadian company Fairfax Holdings. According to sources, this decision was reached following meetings held at the Ministry of Finance on Tuesday. The government and LIC collectively hold approximately 95% of the bank’s equity. Together, they are selling a 60.72% stake. This deal is expected to generate around ₹53,000 crore.

An ET report, citing sources, indicates that Fairfax has raised its bid. The company is now offering ₹81 per share, up from the ₹75 offer made last year. At this price, the sale of a 30.48% stake in the bank could raise approximately ₹26,620 crore. The government holds a 45.48% stake in the bank, while LIC holds just under 50%.

When will the announcement be made?

LIC also plans to sell a 30.24% stake. This would bring the total deal size to ₹53,000 crore ($5.5 billion), marking the largest foreign investment in an Indian bank to date. Fairfax Holdings—owned by Prem Watsa, a Canadian citizen of Indian origin—will also be required to launch an open offer for public shareholders.

A source stated that after extensive negotiations, the government and Fairfax have agreed on the deal. An official announcement could be made at any time.

Another source mentioned that an empowered group of ministers has been briefed on the revised bids and subsequent developments. Finance Minister Nirmala Sitharaman is part of this group.