Fairfax of Canada Acquires 60.2% Stake in IDBI Bank for Rs 53,000 Crore, Marking Major FDI in Indian Banking Sector
Canada-based Fairfax Financial Holdings is set to acquire a 60.72% stake in IDBI Bank for approximately Rs 53,000 crore ($5.5 billion). This transaction will be the largest foreign investment in an Indian bank and represents a significant move in India’s ongoing efforts to privatize state-owned banking assets. The Cabinet Committee on Economic Affairs has approved M/s 10955230 Canada Inc, a subsidiary of Fairfax, as the strategic buyer for the combined stakes held by the government and Life Insurance Corporation of India (LIC).
The government will sell its 30.48% holding for around Rs 26,620 crore, while LIC will divest its 30.24% stake for approximately Rs 26,440 crore. This approval concludes a process that has spanned nine years, complicated by valuation disagreements. Initial bids from Fairfax and Emirates NBD in February 2026 fell below the government’s undisclosed reserve price, leading to a pause in the process. The bidding was later revived, and revised offers were presented to the cabinet committee.
Fairfax, led by Canadian billionaire Prem Watsa, will pay Rs 81 per share, exceeding the benchmark fair value of Rs 75.99 determined by two independent valuation agencies.
Biggest foreign investment in an Indian bank
The proposed sale is the largest transaction in the banking sector and a major step in the effort to privatize IDBI Bank and reduce government ownership in commercial enterprises. The transaction is expected to be completed before the end of FY27. Once finalized, the government will withdraw its representatives from IDBI Bank’s board.
The Fairfax-IDBI Bank transaction surpasses Emirates NBD’s acquisition of a 60% stake in RBL Bank, valued at $3 billion, and MUFG Bank’s purchase of a 20% stake in Shriram Finance for Rs 39,618 crore. The IDBI Bank deal is larger by approximately Rs 13,000 crore. It also exceeds Sumitomo Mitsui’s $2 billion deal for Fullerton India Credit and PayU’s $4.7 billion acquisition of BillDesk.
Regulatory approvals needed
The transaction requires necessary regulatory clearances, including approval from the Reserve Bank of India (RBI), which will conduct a “fit and proper” assessment. Fairfax must also secure clearances from the Competition Commission of India (CCI) and other statutory authorities. The company will need to establish its credentials with the RBI and submit a roadmap to meet regulatory requirements.
Fairfax will be required to make an open offer to public shareholders unless a waiver is granted by the Securities and Exchange Board of India (Sebi). Under RBI regulations, promoters can hold a maximum stake of 26% in a bank, and Fairfax will have up to 15 years to comply with this requirement. The incoming promoter will also face a five-year lock-in period.
Fairfax currently owns a 40% stake in Kerala-based CSB Bank. Following the IDBI Bank acquisition, it must either merge the two lenders or exit its investment in CSB Bank. The new promoter is expected to maintain IDBI Bank’s existing name, brand, and customer relationships for at least three years. LIC will need to reduce its holding in IDBI Bank from 19% to 15% within two years.
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