India has approved the largest foreign acquisition of a domestic lender, granting Canada’s Fairfax Financial Holdings permission to buy a 61% stake in IDBI Bank for $5.6bn. The deal marks a major milestone in New Delhi’s push to privatise state-owned banks and attract foreign capital. Prem Watsa, Fairfax’s chair, called the transaction a “once-in-a-lifetime opportunity” to invest in one of the world’s fastest-growing economies.
IDBI, with 2,100 branches and $49bn in assets, has long struggled with poor financial health, requiring repeated government bailouts. The approval comes as India seeks to consolidate its banking sector and meet disinvestment targets. Recent deals include Sumitomo Mitsui’s $1.6bn stake in Yes Bank and Emirates NBD’s $3bn acquisition of RBL Bank.
The IDBI deal is the first recent instance of a foreign investor taking over a government-backed lender. Shares rose 9% before the announcement, then fell 7% after. The move also coincides with efforts to repair Canada-India relations following a 2023 diplomatic crisis.
Source: Financial Times Companies · Summarized by HeadlinesBriefing