Govt's IDBI Bank may've found a 'Fair' buyer
India is close to accepting an offer from Fairfax Financial Holdings Ltd. for IDBI Bank Ltd., possibly at a slightly higher price, according to people
India is close to accepting an offer from Fairfax Financial Holdings Ltd. for IDBI Bank Ltd., possibly at a slightly higher price, according to people with knowledge of the matter, in what could potentially be the biggest foreign investment in the country’s banking sector.Fairfax, whose earlier bid for IDBI Bank failed to meet the government’s reserve price, is considering increasing its offer by a few rupees per share, the people said, asking not to be identified as the deliberations are private. They declined to share specifics.IDBI Bank’s shares gained as much as 4% in early Mumbai trading on Tuesday. The stock is still down about 15% this year, more than the 8% slide in benchmark NSE Nifty 50 Index.Also Read: IDBI Bank stake sale back on table; Centre explores revival optionsIf the deal materialises, Fairfax would join a wave of foreign firms expanding in India, drawn by the burgeoning wealth class and the world’s fastest-growing major economy.
Japanese lenders alone spent more than $6 billion combined buying stakes in Indian banks last year, including deals by Mitsubishi UFJ Financial Group Inc. and Sumitomo Mitsui Financial Group Inc.Fairfax’s purchase of a 60.7% stake in IDBI would be worth around $5.7 billion, at current prices, eclipsing Emirates NBD PJSC’s $2.8 billion acquisition of a majority stake in mid-sized private Indian lender RBL Bank Ltd.Emails to the India’s finance ministry, Fairfax Financial and IDBI Bank weren’t immediately answered. Final approvals are needed from the Indian cabinet and the banking sector regulator for the deal to proceed.The Indian government — which has not made public the minimum reserve price in the past — has been looking to sell the Mumbai-based lender for several years, as part of its efforts to pare state ownership in the banking sector.
In March, the government scrapped bids for IDBI Bank as they fell short of the minimum price and had since been looking for ways to revive the transaction.Fairfax Financial, founded by Indian-born Canadian billionaire Prem Watsa, was the frontrunner to buy the stake, while Emirates NBD had also bid, Bloomberg reported earlier. The government and state-run Life Insurance Corporation of India together own
about 95% of IDBI Bank, and plan to sell a combined 60.7% stake.IDBI Bank, once burdened by bad loans, has emerged from a major cleanup and returned to profitability in recent years after capital support and aggressive recoveries helped it cut non-performing assets.Fairfax Financial recently brought capital into the country ahead of a potential deal to buy the IDBI Bank stake, Reuters reported earlier.
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