Fairfax Finalizes $5.6B IDBI Bank Acquisition: A Record-Breaking FDI in India’s Banking Sector
The Union Cabinet of India has given the green light to the historic privatisation of IDBI Bank. This approval paves the way for a ₹52,878 crore (~$5.6 billion USD) deal, enabling Canadian investment behemoth Fairfax Financial Holdings, under the leadership of billionaire Prem Watsa, to secure a controlling 60.72% stake in the bank. This transaction marks the largest foreign direct investment (FDI) in India’s financial sector and is the most significant strategic disinvestment since the sale of Air India.
The Cabinet Committee on Economic Affairs (CCEA) gave its approval on October 14, 2026, bringing a five-year privatisation process to a close. Fairfax will purchase shares at ₹81 each, a premium over the benchmark valuation of ₹75.99 per share as determined by independent agencies. The Government of India will offload its 30.48% stake, and the Life Insurance Corporation of India (LIC) will divest 30.24%. Both entities will retain residual stakes of 15% and 19% respectively, maintaining a combined 34% holding in the bank.
Finance Minister Nirmala Sitharaman characterized the move as a “strategic restructuring” rather than a complete divestment, highlighting that the state will retain partial ownership. DIPAM Secretary Arunish Chawla confirmed that the deal is slated to close before the end of the current fiscal year, subject to RBI regulatory clearance. Fairfax will also be obligated to either merge or exit its existing stake in CSB Bank within two years of signing.
Following the announcement, IDBI Bank shares saw a 13% surge, while CSB Bank also experienced a 6% gain, reflecting the market’s strong enthusiasm for this historic privatisation milestone.
Source: Bloomberg – Fairfax to Buy IDBI for $5.6 Billion in Biggest India Bank Deal