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Government approves sale of 60% IDBI Bank stake to Fairfax, shares tumble
Reported by Vivek Joshi (Copy Editor) · Livemint - Markets ·
Confirmed by a second source: Economic Times - Markets
Shares of IDBI Bank fell sharply on Thursday after the Union Cabinet approved the sale of a 60.72% stake to Fairfax Financial Holdings for ₹52,878 crore, valuing each share at ₹81. The stock opened at ₹83.70, rose to an intraday high of ₹84.10 and then slipped as profit‑booking set in.
Expert Views
Avinash Gorakshkar of Avinash Mentor Research said the deal is meant to meet SEBI’s guidelines and the government’s FY27 divestment target of ₹80,000 crore, but it does not mean the entire stake will be off‑loaded. He expects the panic‑sell to calm and the transformation of IDBI into a diversified financial‑services firm to take time under Prem Watsa’s leadership. Abhinav Tiwari of Bonanza noted the share price now trades at about 1.37 times June 2026 book value and 11.5 times Q1 FY27 earnings, suggesting most deal‑related optimism is already priced in. He added that Fairfax plans to contribute its interests in Go Digit Life, Go Digit General and IIFL Capital Services, which could broaden IDBI’s product mix. Ganesh Dongre of Anand Rathi pointed out that the weekly chart stays above the ₹70‑₹75 breakout channel, indicating a bullish structure. He advised a stop‑loss around ₹68‑₹70 and sees a potential target of ₹100‑₹110 if momentum holds.
Context
The sale is part of a broader government push to reduce its banking‑sector holdings and create more market‑driven institutions. Successful integration of insurance and investment businesses could change IDBI’s risk profile and attract private‑sector investors.
ExplainerWhy this matters
What Happened
The Union Cabinet cleared the sale of a 60.72% stake in IDBI Bank to Fairfax Financial Holdings for ₹52,878 crore, valuing the bank at ₹81 per share. The transaction is aimed at meeting the government's FY27 disinvestment target of ₹80,000 crore.
Why It Matters
Moving a majority stake to a private investor could shift IDBI from a traditional lender to a diversified financial‑services group that includes banking, insurance, wealth management and investment banking. The deal tests the government's broader privatisation agenda and may influence sentiment toward other PSU banks.
What Happens Next
The sale is expected to be completed by the end of the current financial year. Post‑completion, Fairfax plans to bring in its insurance and capital‑services assets, while assuring no job cuts. Market watchers will monitor earnings growth, integration progress and any further share supply before the stock’s longer‑term direction becomes clear.
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