India’s long running IDBI Bank privatisation has its buyer. Fairfax Financial, Prem Watsa’s Toronto based insurer and investment group, will acquire the government’s stake in the Mumbai lender in a transaction valued at about 5.6 billion dollars, the largest single foreign investment in an Indian bank and the centrepiece of New Delhi’s bank privatisation programme.
The market’s first verdict was a 7 percent fall in IDBI shares, CNBC reported, as investors compared the announced value with the price the stock had run to on privatisation expectations. The range of figures in the reporting, 5.5 billion to 6 billion dollars, reflects different treatments of the combined government and LIC holdings being sold, and the final structure will be set in the share purchase documents.
Strategically, the buyer matters more than the price. India has historically kept its banks in domestic hands; selling control of a top ten lender to a Canadian financial group, one with a long record of Indian investments, signals that the government’s divestment programme now prioritises execution and capital over nationality. The remaining state bank stakes will be priced off this deal.