Shares of LIC-controlled IDBI Bank tumbled nearly 8 per cent on Thursday, a day after the Cabinet approved the sale of a 60.72 per cent stake in IDBI Bank to Fairfax Financial Holdings for Rs 52,878 crore. This is going to be the country’s biggest strategic disinvestment since the sale of Air India and potentially opening a new chapter in the privatisation of state-controlled banks. This fall comes a day after IDBI Bank shares surged 9 per cent ahead of the announcement on Wednesday, adding Rs 8,086 crore to its market valuation, defying a largely bearish equity market.
IDBI share price
IDBI Bank shares opened in the red at Rs 90 on the BSE, down from the previous close of Rs 90.44. The stock fell further amid heavy selling pressure and touched a low of Rs 83.33, down Rs 7.11 or 7.86 per cent. Last seen, the stock was trading at Rs 83.75, with a fall of 6.69 per cent from 7.40 per cent, and the market cap of the company stood at Rs 90,051.37 crore.
The stock has fallen after two days of consecutive gains and has underperformed the sector by 6.52 per cent. Technically, the counter traded higher than the 5-day, 20-day and 100-day moving averages but lower than the 50-day and 200-day moving averages.
Fairfax to acquire 60.72 per cent stake in IDBI
Canada’s Fairfax Financial Holdings will acquire a 60.72 per cent stake in IDBI Bank for about Rs 53,000 crore (USD 5.5 billion), the largest foreign investment in an Indian bank and a major milestone in the country’s long-delayed banking privatisation drive.
The Cabinet Committee on Economic Affairs approved Fairfax subsidiary M/s 10955230 Canada Inc as the strategic buyer for the government’s 30.48 per cent stake (for about Rs 26,620 crore) and state-run Life Insurance Corporation of India’s (LIC) 30.24 per cent stake (for about Rs 26,440 crore).
Canadian billionaire Prem Watsa-led Fairfax will pay Rs 81 per share, above the benchmark fair value of Rs 75.99 set by two independent valuation agencies, an official statement said on Wednesday.
The deal – the largest in the banking space – marks a major milestone in a long-delayed effort to privatise IDBI Bank and reduce state ownership of commercial enterprises.
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(This article is for informational purposes only and should not be construed as investment, financial, or other advice.)
