The Cabinet Committee on Economic Affairs has approved the strategic sale of IDBI Bank Ltd to M/s 10955230 Canada Inc, a subsidiary of Fairfax Financial Holdings Ltd, for a total consideration of ₹52,878.0806181 crore. The transaction involves the sale of 60.72% of the bank's total shareholding, comprising 30.48% from the Government of India and 30.24% from the Life Insurance Corporation of India, with proceeds to be divided in the same proportion.
The valuation process involved two independent professional valuation agencies using Market Multiple Method and Asset Valuation Method, resulting in a benchmark price of ₹75.99 per share. The winning bid exceeded both this benchmark price and the fair value estimates from both valuation agencies. The stock market price, which fluctuated between ₹61.01 and ₹118.38 during the valuation period, was disregarded due to volatility and narrow trading.
Post-transaction, the Government of India will retain a 15% residual equity stake while LIC will hold 19%, with both entities withdrawing their nominees from the board and becoming public shareholders. The Cabinet has delegated powers to the Alternative Mechanism for minority stake sales of the residual government shareholding through open market operations, while LIC will manage its residual stake in compliance with regulatory directions.
The successful bidder must now present credentials to the RBI for 'Fit & Proper' assessment and submit a roadmap for compliance with regulatory conditions. The transaction is expected to have significantly positive effects on India's banking and financial sector, representing the largest FDI in the financial sector to date. The strategic buyer is expected to infuse private capital, introduce new technology, and implement better management practices to enhance the bank's business potential and competitiveness in credit and deposit growth.