Fairfax Financial Holdings’ proposed acquisition of a controlling 60.72% stake in IDBI Bank is at risk of delay as the Indian government reviews the Canadian investor’s valuation offer of approximately Rs. 81 per share. The deal, valued at nearly Rs. 53,000 crore for the entire stake, has hit a snag after a high-level meeting at the Finance Ministry failed to reach an agreement.
Finance Ministry Reviews Fairfax Offer
On Monday, a high-level meeting convened by the Finance Ministry assessed Fairfax’s reported offer to determine if it aligns with the government’s valuation expectations. The stake sale is a key part of the Centre’s broader disinvestment strategy, and its success is critical for planned fiscal targets. Sources indicate that the government is not satisfied with the Rs. 81 per share figure, which matches the stock’s closing price of Rs. 81.12 after a 10.56% decline on Tuesday.
Wider Banking Consolidation Plans
Fairfax, led by Prem Watsa, intends to merge its existing banking operations with IDBI Bank if the acquisition goes through. The group already holds about 40% of CSB Bank and could combine the two lenders under a single banking license. However, funding remains a question. Speculation that Fairfax would sell its stake in IIFL Finance to help finance the deal was denied by IIFL Finance on Wednesday, which stated that no such negotiations are underway.
The delay underscores the challenge of valuing state-owned banking assets amid market volatility and regulatory hurdles. Investors will closely watch for further developments as the government and Fairfax continue talks.
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