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The Union Cabinet has given green signal to the plan to sell IDBI Bank. Under this decision, the Central Government and LIC will together sell their 60.72% stake in the bank to Canadian billionaire Prem Vats’ company ‘Fairfax’. This deal has been finalized for ₹52,877 crore.
This is the biggest disinvestment by the central government, after Air India is sold to Tata Group in 2022.
Government and LIC will have 34% stake
The central government will sell its 30.48% stake in IDBI Bank and LIC its 30.24% stake in Fairfax Company. Even after this deal, the government will retain 15% shares and LIC will retain 19% shares in the bank i.e. a total of 34%.
Stake in IDBI Bank
| shareholder | stake now | after the deal |
| fairfax | 0% | 60.72% (new promoter) |
| LIC | 49.24% | 19.00% |
| Central government | 45.48% | 15.00% |
| Public/Other | 5.28% | 5.28% |
The bid was ₹5 more than expected, so the deal was accepted.
The government had taken the help of two independent agencies to determine the fair value of a share of the bank. After calculations, these agencies said that the fixed price of one share of IDBI Bank should be ₹75.99.
Canadian company Fairfax bid more than the base price fixed by the government i.e. ₹ 81 per share. Since Fairfax’s bid was ₹5.01 per share higher than the government’s estimate, the government accepted it.
Process of selling IDBI Bank completed in two phases
It first started on October 7, 2022, when the government invited applications from buyers willing to buy the bank.
Initially 5 big companies showed interest. When the government checked everyone’s documents and rules, only 4 of these companies were found eligible.
After this, in the last round two companies submitted their technical documents and bids. The Canadian company won the deal by making the best bid.
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