IDBI Bank’s ₹53,000 Crore Fairfax Deal Targets FY27 Completion, RBI Approval Awaited

New Delhi: IDBI Bank is set to conclude its strategic stake sale to Canada's Fairfax Financial Holdings by the end of FY27, pending Reserve Bank of India approval, according to DIPAM Secretary Arunish Chawla speaking to PTI. The deal would see Fairfax become the lender's strategic buyer. However, RBI clearance is essential before the parties can sign the share purchase agreement, which is expected to enable completion before the financial year ends.

The government has approved the sale of a 60.72% stake in IDBI Bank to Fairfax for around ₹53,000 crore. This transaction includes a 30.48% government holding and LIC's 30.24% stake. Fairfax, led by Canadian billionaire Prem Watsa, will pay ₹81 per share, surpassing the ₹75.99 fair value determined by two independent valuation agencies.

Minority and retail shareholders' interests will be protected through an open offer launched after signing the agreement, allowing eligible minority shareholders to tender their holdings, as per Chawla. Additionally, the market regulator has instructed LIC to reduce its remaining holding from 19% to 15% after divestment, increasing the public float by four percentage points and expanding shares available to public investors.

Chawla reassured that the existing employees' service conditions will remain protected, describing IDBI Bank as a restructuring banking company. The proposed transaction marks a major step in India's banking privatization program, with the sale process initiated in 2022 and facing difficulties earlier in the year when initial bids fell short of the government's reserve price.

Despite the challenges, the restructuring is deemed the biggest strategic transaction, with substantial foreign investment anticipated. Completion, however, remains conditional on regulatory clearance and the final execution of transaction documents.