IDBI Bank shares fall 6% after Cabinet clears ₹52,000-crore stake sale to Fairfax; LIC shares up 2%

Shares of IDBI Bank fell as much as 6.5% to ₹84.51 on the BSE on Thursday after the Union Cabinet approved the strategic sale of the lender to a subsidiary of Fairfax Financial Holdings for around ₹52,000 crore. The sell-off dragged the bank’s market capitalisation (m-cap) to around ₹91,288 crore.

In contrast, shares of the Life Insurance Corporation of India (LIC), which is also selling its stake in IDBI Bank, rose 2.4% to ₹402.50, taking its m-cap above ₹5 lakh crore.

The Cabinet Committee on Economic Affairs (CCEA) approved the strategic sale on Wednesday, in what is expected to be one of India’s largest foreign direct investment (FDI) deals in the financial services sector.

The proposed transaction involves the sale of a combined 60.72% stake held by the Government of India and LIC. Canada-based Fairfax Financial Holdings will acquire the stake through its subsidiary, 10955230 Canada Inc. The deal remains subject to the requisite regulatory approvals.

Govt, LIC to retain minority stakes

The government will divest 30.48% of IDBI Bank’s equity, while LIC will sell 30.24%, transferring majority ownership and management control to Fairfax.

The Centre currently holds a 45.48% stake in IDBI Bank, while LIC owns 49.24%, taking their combined shareholding to around 94.72%. Following the proposed divestment, the government’s stake is expected to decline to approximately 15% and LIC’s holding to around 19%, subject to the final transaction structure.

The expression of interest for the stake sale was issued in October 2022, while financial bids were submitted on February 6, 2026. Fairfax Financial Holdings and Emirates NBD were among the leading contenders during the bidding process.

Deal to deepen Fairfax’s India presence

Founded in 1985, Toronto-headquartered Fairfax Financial Holdings is a financial services group led by Indian-born investor Prem Watsa. It operates primarily in property and casualty insurance, reinsurance and investment management, and has built a global presence through acquisitions and a long-term, value-oriented investment strategy.

India has emerged as an important market for the group, whose investments span banking, infrastructure, financial services and other sectors. Its affiliate, Fairfax India Holdings Corporation, was established in 2014 to make long-term investments in Indian businesses.

In banking, Fairfax-backed investments include CSB Bank, formerly Catholic Syrian Bank. Fairfax has backed the lender as part of its transformation. The proposed IDBI Bank acquisition would further expand the group’s exposure to India’s banking sector.

Fairfax also has investments in infrastructure, including Bengaluru’s Kempegowda International Airport, operated by Bangalore International Airport Ltd. Other businesses in its India investment portfolio include Quess Corp, Thomas Cook India, Go Digit General Insurance and IIFL Finance.

(DISCLAIMER: The views and opinions expressed by investment experts on fortuneindia.com are either their own or of their organisations, but not necessarily that of fortuneindia.com and its editorial team. Readers are advised to consult certified experts before taking investment decisions.)