Canada’s minister of international trade Maninder Sidhu on Thursday called India’s decision to approve the strategic sale of IDBI Bank to the Toronto-headquartered Fairfax Financial Holdings Ltd (FFHL) a “big win” for a Canadian company. Sidhu is currently leading the Team Canada Trade Mission to India.
In a statement, Sidhu said the deal was worth roughly CA$ 7.9 billion “involving IDBI Bank, one of India’s largest banks, highlighting the enormous opportunities for Canadian investors doing business in India. The Cabinet approval on Wednesday was for sale of a 60.72% stake in IDBI Bank Ltd, along with the transfer of management control to the Canadian financial services firm FFHL, with 30.48% coming from the government’s holding and 30.24% from that held by Life Insurance Corporation of India. It is worth ₹ 52,878.08 crore (US$ 5.6 billion) and marks the largest strategic disinvestment deal ever, and the largest investment by a foreign financial services company in India. Earlier reporting noted: Cabinet clears Fairfax’s ₹58k-cr IDBI majority stake acquisition The Union Cabinet on Wednesday approved the strategic sale of a 60.72% stake in IDBI Bank Ltd , along with the transfer of management control to Canadian financial services company Fairfax Financial Holdings Ltd for ₹ 52,878.08 crore, in the largest strategic disinvestment deal ever, and also the largest investment by a foreign financial services company in the country. Earlier reporting noted: Of the 60.72%, 30.48% will come from the government’s holding and 30.24% from that of state-owned Life Insurance Corporation of India (LIC). Post-sale the government’s stake in the company will reduce to 15%, LIC’s to 19% . Minority retail shareholders own around 4% of the bank.
In a statement, FFHL’s Indian-origin chairman and CEO Prem Watsa said, “This transaction represents a once-in-a-lifetime opportunity to purchase a majority interest in a bank in one of the world’s fastest growing economies and to combine it with a successful and growing insurance company and an established provider of investment banking and wealth management services in the same jurisdiction. The company owns the majority stake in CSB (formerly Catholic Syrian Bank), but, as part of its bid for IDBI, has already said it will divest that holding to meet Reserve Bank of India requirements.
Earlier reporting noted: Fairfax is founded by Prem Watsa, a Canadian businessman of Indian origin who was born in Hyderabad and graduated from the Indian Institute of Technology, Madras.
With nearly 300 Canadian executives joining the mission, it is the largest such delegation to India in over 30 years. Sidhu will also visit Bengaluru before leaving India on October 16. The Cabinet decision was announced as both Sidhu and Canada’s foreign minister Anita Anand were in New Delhi.
He said FFHL was “very excited to be selected by the government of India to be the purchaser of the government’s interest in IDBI Bank” and he thanked Prime Minister Narendra Modi and his team “for undertaking a highly transparent and competitive process before selecting us as the buyer”. “We assure the Indian government that we are committed to building the world’s finest financial institution from India,” he added. “Combining IDBI Bank, Digit, and IIFL Capital would create an entity that is well-positioned to participate in the continued growth and success of Indian markets, and we expect it will provide meaningful and significant benefits to Indian consumers and businesses,” Watsa noted.
In May this year, Fairfax acquired a majority stake in IIFL Capital Services Limited. It also established the startup Digit Insurance. That reference was to the comprehensive economic partnership agreement (Cepa), for which the fifth negotiating round concluded in Ottawa just last week.
Sidhu left for Mumbai later on Wednesday as the trade mission began. Sidhu met commerce minister Piyush Goyal in Delhi and Mumbai, and a release from Global Affairs Canada, Canada’s foreign ministry, on Tuesday said the two countries were “intensifying their efforts to conclude a mutually beneficial agreement.
