Canada’s Fairfax Financial Holdings will buy a majority stake in India’s IDBI Bank in a deal worth 528.78 billion Indian rupees ($5.56 billion), the Indian government said on Wednesday.
The acquisition, in the making for over four years, will see Fairfax take control of IDBI Bank in India’s biggest cross-border bank deal.
Fairfax will offer 81 rupees per share for IDBI Bank above the benchmark price of 75.99 per share determined by the government based on fair valuations, Indian officials said in a statement.
Shares of IDBI Bank closed at 90.44 rupees per share, up 9% on the day. The announcement came after the close of trade.
INDIA SEEING RUSH OF FOREIGN INVESTMENTS
India’s federal government and state-run Life Insurance Corp of India LIFI.NS are selling a combined 60.7% stake in IDBI Bank. They will retain a 34% stake after the transaction, and can sell their holdings in the open market as part of the agreement.
The deal is subject to approvals from the Reserve Bank of India, the country’s central bank and banking regulator.
Over the last two years, India has seen a rush of foreign investments in the financial sector, which is seeing strong demand for credit and low delinquencies.
Last year, Emirates NBD said it was acquiring a stake in private lender RBL Bank RATB.NS for $3 billion.
Japan’s Sumitomo Mitsui Banking Corporation SUMFDS.UL also bought a 20% stake in Yes Bank YESB.NS, and MUFG 8306.T acquired a 20% holding in non-bank lender Shriram Finance SHMF.NS for $4.4 billion.
Reuters
