Canada's Fairfax Leads Race to Buy IDBI Bank, Kotak Mahindra Bank Still in Fray

The Centre’s long-delayed plan to divest its stake in IDBI Bank is likely to spill into early January as it evaluates two leading contenders, Toronto-based Fairfax Financial and domestic private lender Kotak Mahindra Bank. Both had until the end of December to submit a financial bid for the state-owned lender.

A report in the Economic Times says Prem Watsa–owned Fairfax is currently the frontrunner to acquire a controlling stake in IDBI Bank. According to the report, Fairfax Financial is considering an all-cash offer aligned with the bank’s current market valuation.

Kotak Mahindra Bank is also preparing a bid that may combine cash and shares. The deadline for submitting offers is now expected to be extended into early January.

The Indian government holds 45.48% of IDBI Bank, while LIC owns 49.24%. Together, they plan to offload 60.7% of the lender.

Earlier reports suggested that Emirates NBD had moved ahead in the race for a majority stake. However, after agreeing to acquire a controlling stake in RBL Bank, the Dubai-based lender is reassessing whether it will participate in the final round for IDBI Bank.

IDBI Bank’s share price has tripled since the government announced its divestment plan three years ago. On Friday, the stock was up 3.5% at ₹98.50 apiece on the BSE at 1.45 pm. Its market value currently stands at ₹1.05 lakh crore.

In 2023, DIPAM announced that it had received multiple expressions of interest for IDBI Bank. It was later reported that Fairfax India Holdings, Kotak Mahindra Bank, Emirates NBD, and US asset management firm Oaktree Capital had cleared the Reserve Bank of India’s ‘fit and proper’ assessment.

Fairfax, which already owns CSB Bank, and the other bidders were given access to IDBI Bank’s data room and a draft share purchase agreement as part of their due diligence. The government will now set a confidential reserve price for the sale, to be finalised after bids are submitted but before they are opened.