IDBI Bank Slides After Fairfax Stake Sale Approval
The government approved a 60.72% stake sale at 81 rupees per share, below the bank’s previous close and analysts’ expected range.
Key takeaways
- The government approved selling a 60.72% stake in IDBI Bank to Fairfax Financial Holdings.
- Fairfax’s winning bid was 81 rupees per share.
- IDBI Bank shares closed at 90.39 rupees before falling on Thursday.
- Analysts said the deal was unlikely to affect other public-sector stocks.
IDBI Bank shares fell on Thursday after India approved the sale of a 60.72% stake to Canada’s Fairfax Financial Holdings for 52,878 crore rupees. The deal price is 81 rupees per share.
The government will sell 30.48% of its holding, while Life Insurance Corporation of India will sell 30.24%. After the sale, the government is expected to retain 15% and LIC 19%. The transaction still requires final approvals, and Fairfax must undergo a “fit and proper” assessment by the Reserve Bank of India.
IDBI closed Wednesday at 90.39 rupees, above Fairfax’s bid. As of 06:33 UTC on Thursday, the shares were at 83.93 rupees, down 7.15% from the previous close.
Analyst Ambareesh Baliga said markets had expected a price of 100 to 110 rupees per share, calling the winning bid a disappointment. Analysts cited by Business Standard said the transaction was unlikely to affect other public-sector stocks, including state-owned banks.
The finance ministry said the sale would be India’s largest foreign direct investment transaction in the financial sector once completed.
This article was produced with the help of AI technology. Based on reporting by the outlets listed above.
