Daijiworld Media Network - Mumbai

Mumbai, Oct 15: Shares of IDBI Bank fell around 7.5% on Thursday after a sharp rally in the previous session, following the announcement that Canada-based Fairfax Financial Holdings would acquire a 60.72% stake in the lender for approximately Rs 53,000 crore ($5.5 billion).

The stock declined 7.54% to Rs 83.62 on the BSE, while shares on the NSE dropped 7.48% to the same level.

On Wednesday, IDBI Bank shares had surged 9% ahead of the announcement, adding Rs 8,086 crore to the bank’s market valuation.

The Cabinet Committee on Economic Affairs approved Fairfax subsidiary M/s 10955230 Canada Inc as the strategic buyer for the government’s 30.48% stake in IDBI Bank, valued at around Rs 26,620 crore, and the Life Insurance Corporation of India’s 30.24% stake, valued at approximately Rs 26,440 crore.

Led by Canadian billionaire Prem Watsa, Fairfax will pay Rs 81 per share, above the benchmark fair value of Rs 75.99 determined by two independent valuation agencies, according to an official statement issued on Wednesday.

The proposed transaction would mark a major step in the long-delayed privatisation of IDBI Bank and is expected to be the largest foreign investment in an Indian bank.

The disinvestment process began in 2022 but faced a setback earlier this year after initial bids fell below the government’s reserve price.

The deal is yet to receive approval from the Reserve Bank of India, which will conduct a “fit and proper” assessment of the buyer. Clearance from the Competition Commission of India and other statutory authorities is also required before the transaction can be completed.