Fairfax IDBI Bank Deal: Toronto Firm to Buy 60.72% Stake for $7.9 Billion

File photo: Prem Watsa, Fairfax Financial Holdings chairman and CEO, with a Fairfax delegation at a meeting with India's Prime Minister in New Delhi in January 2017. Photo by the Prime Minister's Office, India (GODL-India), via Wikimedia Commons.

It took four years, two rounds of bidding, and one failed reserve price. But on Wednesday, October 14, New Delhi finally said yes: India's cabinet approved the sale of a 60.72 per cent stake in IDBI Bank to a Toronto company — handing Canadian billionaire Prem Watsa the biggest foreign banking takeover in Indian history.

The buyer is 10955230 Canada Inc., a subsidiary of Fairfax Financial Holdings, the Toronto-headquartered insurer-investor Watsa built from scratch. The price: ₹52,878.08 crore — roughly CA$7.9 billion, or about US$5.6 billion. India's finance ministry called it the largest foreign direct investment in its financial sector once completed.

"This is a big win for a Canadian company," said Maninder Sidhu, Canada's minister of international trade, in a statement from Mumbai, where he is leading the Team Canada trade mission. He called the deal worth roughly CA$7.9 billion and pointed to it as proof of "the enormous opportunities for Canadian investors doing business in India."

Fairfax IDBI Bank deal: how the numbers work

Here's the anatomy of the deal, as laid out in India's official statement. Of the 60.72 per cent stake on offer, the Indian government is selling its 30.48 per cent holding and the state-owned Life Insurance Corporation of India is selling 30.24 per cent. After the sale, the government keeps 15 per cent and LIC keeps 19 per cent — a combined 34 per cent — though, notably, neither will hold a seat on the bank's board anymore.

Fairfax is paying ₹81 per share. That number matters because it's above the ₹75.99 benchmark fair value that two independent valuation agencies arrived at — meaning Watsa outbid what the experts thought was fair. It wasn't always a smooth ride: when initial bids were invited earlier this year, a reserve price of ₹94.42 per share was set, the bids came in below it, and the whole process stalled. The exercise was revived, revised bids were submitted, and on October 14 the Cabinet Committee on Economic Affairs, headed by Prime Minister Narendra Modi, gave its blessing.

Finance Minister Nirmala Sitharaman was quick to frame it her way. She described the transaction as a "strategic restructuring" rather than a strategic disinvestment — bureaucratic hair-splitting, maybe, but it reflects how sensitive the politics of selling a state lender still are in India.

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Who is Prem Watsa, Canada's Warren Buffett?

If you follow Canadian business, you know the name. Watsa, 76, founded Fairfax in the 1980s and turned it into one of the most respected property-and-casualty insurers in the world, earning the nickname "Canada's Warren Buffett" for his value-investing style. He's Indian by birth — born in Hyderabad, educated as a chemical engineer at IIT Madras — and earned his MBA in Canada before taking over Fairfax. His estimated net worth sits around US$2.5 billion.

This isn't his first swing at Indian banking. Fairfax already owns a 40 per cent stake in CSB Bank, a lender based in Kerala. That raises a wrinkle: India's central bank normally caps promoter ownership at 26 per cent, so Fairfax may have to restructure its holdings as the Reserve Bank of India weighs the deal. The acquisition isn't done yet — it still needs approvals from the RBI and India's competition commission, and the government expects completion before the fiscal year ends.

What Watsa plans to do with IDBI Bank

In Fairfax's own statement, Watsa didn't hide his ambition. He called the deal "a once-in-a-lifetime opportunity to purchase a majority interest in a bank in one of the world's fastest growing economies" and pledged that Fairfax is "committed to building the world's finest financial institution from India."

The plan, Fairfax says, is to fold IDBI Bank together with two other Fairfax-linked Indian financial firms — Digit Insurance and IIFL Capital — into a unified financial services business. The pitch: a one-stop shop for the banking, insurance and wealth-management needs of India's fast-growing middle class.

It's also a sign of IDBI's long road back. The bank was put under the Reserve Bank's Prompt Corrective Action framework in 2017 after piling up bad loans, and restrictions were only lifted in 2021. Investors reacted with typical market scepticism anyway: IDBI's shares fell more than 7 per cent in Thursday's morning trade, according to the Economic Times.

Why it matters for Canada

Timing is everything. The deal lands in the middle of the biggest Canada-India thaw in years, with Carney's government pushing to double non-US trade over the next decade and Sidhu leading nearly 300 business delegates through Mumbai and Bengaluru this week. There are still hurdles — regulatory clearance, the CSB question, an open offer Fairfax must make to IDBI's minority shareholders. But when a Canadian firm wins a five-year bidding war for a majority stake in an Indian bank, it's a small landmark in the story of where Canadian capital is going.