Cabinet clears IDBI Bank sale to Prem Watsa-led Fairfax

New Delhi: The Cabinet on Wednesday approved the sale of a 60.72 per cent stake in IDBI Bank to Fairfax Financial Holdings for Rs 52,878 crore, in the country's biggest strategic disinvestment since the sale of Air India and potentially opening a new chapter in the privatisation of state-controlled banks.

The decision by the Cabinet Committee on Economic Affairs (CCEA), headed by Prime Minister Narendra Modi, brings to a close a process that has stretched over five years, marking a significant step in the government's efforts to reduce its ownership of state-run assets and attract private capital into the financial sector. "Once completed, this will be the largest FDI in the financial sector of our economy so far," the government said in a statement.

Information and Broadcasting Minister Ashwini Vaishnaw also briefed the media about the Cabinet decision on the IDBI Bank's strategic restructuring.

He said the government and LIC will together hold a 34 per cent stake in the restructured entity.

The proposed sale of a combined 60.72 per cent stake held by the government and Life Insurance Corporation of India (LIC) would transfer control of the lender to Fairfax, subject to the completion of the transaction and requisite regulatory approvals.

"The CCEA ...approved M/s 10955230 Canada Inc (parent entity M/s Fairfax Financial Holdings Ltd) as the strategic buyer for this transaction for a purchase consideration of Rs 52,877.07 crore for the acquisition of 60.72 per cent stake in IDBI Bank, comprising 30.48 per cent equity held by the GoI and 30.24 per cent by the LIC," the statement said.

Department of Investment and Public Asset Management (DIPAM) Secretary Arunish Chawla said the deal will be completed before the end of the current fiscal. Fairfax will have to also make an open offer to the minority shareholders. Fairfax, which holds a stake in CSB, will have to either merge it with IDBI Bank or exit the holding within 2 years. (IDBI Bank stake sale: A nine-year journey: P2)

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