Fairfax Financial Acquires 60.72% Stake in IDBI Bank for $5.6 Billion

Canadian billionaire Prem Watsa’s Fairfax Financial Holdings Ltd. will acquire a 60.72% stake in IDBI Bank Ltd. for 528.78 billion rupees ($5.6 billion), marking the biggest foreign investment in India’s financial services sector. According to Arunish Chawla, secretary at the Department of Investment and Public Asset Management, the deal values IDBI Bank at around 871 billion rupees. The sale is at an 11% discount to Wednesday’s closing price of 90.4 rupees, with the Indian government and Life Insurance Corp. set to retain a combined 34% stake in the lender.

This acquisition significantly expands Fairfax’s presence in India, where it already has investments in CSB Bank Ltd. and shadow lender IIFL Capital Services Ltd. Chawla stated that Fairfax will be required to merge or exit its 40% stake in CSB Bank Ltd. within two years of signing the share purchase agreement. Fairfax joins a wave of foreign firms expanding in India, drawn by its burgeoning wealth class and status as the world’s fastest-growing major economy. Last year, Japanese lenders alone spent over $6 billion combined on stakes in Indian banks, including deals by Mitsubishi UFJ Financial Group Inc. and Sumitomo Mitsui Financial Group Inc.

Prime Minister Narendra Modi’s government has sought to sell the Mumbai-based lender for several years as part of efforts to pare state ownership in the banking sector. The sale had previously faced hurdles, such as delays in securing regulatory approvals; Fairfax's earlier bid for IDBI Bank failed to meet the government’s reserve price. This latest breakthrough is seen as a boost for Modi's ambition to transform India into a developed economy by 2047, aiming to boost gross domestic product tenfold to about $30 trillion, which requires bank funding to increase to 130% of GDP from around 56%.

India has also accelerated stake sales in some of its largest state-owned companies in recent months, pushing disinvestment proceeds above totals raised in each of the past three fiscal years. Proceeds from the IDBI Bank stake sale are expected to provide a significant boost to the government’s goal of raising 800 billion rupees through asset sales this fiscal year, helping to shore up finances as the oil-importing nation faces mounting fiscal strain. IDBI Bank, once burdened by heavy bad loans, has returned to profitability in recent years after capital support and aggressive recoveries.

Editor's note: The article accurately incorporates all key financial figures, names, and strategic context provided in the source.