Centre and LIC to hold up to 15% stakes as public shareholders in IDBI Bank after Fairfax strategic sale

Key facts

• The Government of India and Life Insurance Corporation of India (LIC) will become public shareholders in IDBI Bank after the strategic sale, with equity holdings capped at 15 per cent and no board representation.
• The government approved the sale of a 60.72 per cent stake in IDBI Bank to Canada's Fairfax Financial Holdings for about ₹53,000 crore ($5.5 billion), the largest foreign investment in an Indian bank.
• Fairfax will acquire the government's 30.48 per cent stake valued at about ₹26,620 crore and LIC's 30.24 per cent stake valued at about ₹26,440 crore.
• Fairfax, led by Canadian billionaire Prem Watsa, will pay ₹81 per share, above the benchmark fair value of ₹75.99 set by two independent valuation agencies.
• The market regulator directed LIC to reduce its stake in IDBI Bank from post-diluted 19 per cent to 15 per cent, raising the bank's public float by an additional 4 percentage points.
• The IDBI Bank strategic transaction is expected to be completed by the end of the current financial year, subject to clearance from the Reserve Bank of India (RBI), after which the share purchase agreement will be signed.
• After the share purchase agreement is signed, Fairfax will be required to make an open offer to minority shareholders in accordance with applicable regulations.
• Following the restructuring, the responsibility to run IDBI Bank and infuse capital whenever required will rest with the strategic buyer.
• The IDBI Bank sale process began in 2022 and faced a setback earlier this year when initial bids fell below the government's reserve price.