Canada’s Fairfax Financial Holdings has agreed to acquire a 60.7% majority stake in India’s IDBI Bank for approximately 528.78 billion rupees, equivalent to about $5.56 billion.
The transaction represents the largest cross-border banking deal in India and marks a major step in the government’s long-running effort to privatize the lender.
Fairfax will acquire the shares at 81 rupees each.
Following completion of the transaction, India’s government and state-controlled Life Insurance Corporation of India are expected to retain a combined 34% interest in IDBI Bank.
The acquisition gives Fairfax control of a significant Indian banking franchise with more than 2,000 branches and approximately 4.44 trillion rupees in assets.
IDBI’s financial condition has changed dramatically in recent years.
The bank’s gross bad-loan ratio stood near 32% in 2018 during a period of severe financial stress. By 2026, that ratio had fallen to approximately 2.3%.
That improvement helped transform IDBI from a troubled institution into a substantially more attractive acquisition target.
Fairfax already has considerable exposure to India.
Through Fairfax India Holdings and other investments, the group has approximately $3.8 billion invested in Indian assets and holds interests in financial businesses including IIFL Capital and 5paisa.
Control of IDBI would significantly expand that footprint.
The transaction also arrives during a broader increase in foreign investment in India’s financial sector.
Strong credit demand, relatively low delinquency rates and India’s long-term economic growth have encouraged international financial groups to pursue larger positions in the country’s banks and financial-services companies.
For India’s government, the transaction is also an important test of its privatization program.
New Delhi began pursuing the IDBI divestment several years ago, but the country’s broader privatization agenda has progressed more slowly than initially anticipated.
A successful transfer of control would therefore have significance beyond IDBI itself.
The transaction remains subject to regulatory approval, including approval from the Reserve Bank of India.
For investors, attention now shifts to the regulatory process and Fairfax’s strategy for IDBI once control of the bank transfers.
