IDBI Bank shares slid after India said it will sell a 60.7% stake in the lender to Fairfax Financial Holdings for over 529 billion rupees. The deal could become the largest foreign direct investment in India’s financial sector once approved.
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01Summary
- 01IDBI Bank shares fell more than 7% on Thursday after the stake-sale announcement.
- 02The Indian government said Fairfax Financial Holdings will buy a 60.7% stake for over 529 billion rupees, or $5.5 billion.
- 03India’s Ministry of Finance said the deal would be the largest foreign direct investment transaction in the country’s financial sector if final approvals are secured.
- 04Fairfax’s winning bid was 81 rupees per share, above the government’s average fair value estimate of 75.99 rupees and below Wednesday’s closing price of 90.39 rupees.
- 05Fairfax must undergo a fit and proper assessment by the Reserve Bank of India before the transaction can proceed.
02Why it matters
The sale is a major privatisation move and a sign of India’s effort to raise funds as fiscal pressures deepen. It also matters because it could reshape ownership of a state-owned lender and set a record for foreign investment in India’s financial sector.
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