The IDBI Bank stake sale came into focus on Thursday after the Cabinet Committee on Economic Affairs (CCEA) approved the sale of a 60.72 per cent stake in the lender to Canada-based Fairfax Financial Holdings’ parent entity.
IDBI Bank shares declined sharply following the announcement. The stock fell as much as 7.45 per cent to ₹83.70 during morning trade, hitting an intraday low around 10 am.
At the last count, shares were trading at ₹84.20, down nearly 7 per cent.
The banking stock has also remained under pressure over a longer period. It declined around 10 per cent over the past year and 19 per cent year-to-date.
IDBI Bank Stake Sale Worth ₹52,878 Crore
The CCEA approved the sale of a combined 60.72 per cent equity stake in IDBI Bank for a purchase consideration of ₹52,878.08 crore.
The transaction involves the government’s 30.48 per cent holding and Life Insurance Corporation of India’s (LIC) 30.24 per cent stake.
Following the proposed transaction, the government will retain a 15 per cent shareholding in the lender, while LIC will hold 19 per cent.
Finance Minister Nirmala Sitharaman described the transaction as a strategic restructuring rather than strategic disinvestment. She also clarified that the government and LIC would continue to hold stakes in the bank.
The government and LIC had previously infused capital into IDBI Bank amid concerns over its financial health. The lender required repeated capital support, initially from the government and subsequently from the state-owned insurer.
Fairfax Selected as Strategic Buyer
According to the official statement, the CCEA approved Canada Inc., the parent entity of Fairfax Financial Holdings Ltd., as the strategic buyer following a comprehensive evaluation by the CGD and consideration of recommendations from the Alternative Mechanism.
The successful bidder must present its credentials to the Reserve Bank of India (RBI) for a Fit and Proper Assessment. It must also submit a roadmap to comply with the regulatory conditions prescribed during the expression of interest (EoI) stage.
The transaction remains subject to the applicable regulatory requirements.
The official statement said the deal, once completed, would represent the largest foreign direct investment (FDI) in India’s financial sector so far.
The stake sale marks a major ownership change for IDBI Bank, while the government and LIC will continue to retain minority holdings in the lender.
