- Proposed sale of 60.72% stake in IDBI Bank may face delays due to valuation issues
- Fairfax's Rs 81-a-share offer values IDBI stake at around Rs 53,000 crore
- IDBI Bank shares fell 11% following the valuation concerns
The proposed sale of a 60.72% stake in IDBI Bank may face a delay, with no agreement with Fairfax reached as of yet over the lender's valuation, as per sources in the know cited by NDTV Profit.
A top-level meeting was held at the Finance Ministry on Monday to discuss whether Fairfax's reported Rs 81-a-share offer, which values the stake at around Rs 53,000 crore, is in line with the government's valuation expectations. IDBI Bank shares crashed 11% on Tuesday.
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Fairfax held 15.2% stake in IIFL Finance as on June 30, according to Bloomberg compiled data. The Indian firm has a current market value of $2.98 billion.
Fairfax's move underscores how it is gearing up to acquire a 60.7% stake in IDBI Bank in a sweetened offer that Indian authorities are close to accepting, people have previously said.
The stake being pitched to global investment companies comes at a time when India's financial services industry has become a target for acquisitions. Buyers are drawn by the growing flow of household savings into formal investments, rising credit demand and the opportunity to scale in a rapidly digitizing market, though regulations often complicate deals. Last year, Blackstone Inc. invested more than $700 million for a 9.9% stake in Federal Bank.
If Fairfax acquires IDBI Bank, it is expected to consolidate some of its existing Indian investments in lending firms in line with regulatory rules, according to the people. Fairfax also owns a 40% stake in small private-sector lender CSB Bank Ltd.
ALSO READ: Fairfax May Exit IIFL Finance Ahead of Likely IDBI Bank Deal
In May, Fairfax's India unit agreed to raise its stake to become the majority owner in IIFL Capital Services Ltd., a capital markets and wealth management firm. Fairfax plans to bring IIFL Capital under its wholly owned subsidiary after it acquires IDBI Bank, the people said.
The Indian subsidiary recently brought ‌capital into the country ahead of Fairfax's potential deal to acquire IDBI Bank, Reuters reported in June.
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