Canada’s minister of international trade Maninder Sidhu on Thursday called India’s decision to approve the strategic sale of IDBI Bank to the Toronto-headquartered Fairfax Financial Holdings Ltd (FFHL) a “big win” for a Canadian company. Sidhu is currently leading the Team Canada Trade Mission to India.
In a statement, Sidhu said the deal was worth roughly CA$ 7.9 billion “involving IDBI Bank, one of India’s largest banks, highlighting the enormous opportunities for Canadian investors doing business in India.”
The Cabinet approval on Wednesday was for sale of a 60.72% stake in IDBI Bank Ltd, along with the transfer of management control to the Canadian financial services firm FFHL, with 30.48% coming from the government’s holding and 30.24% from that held by Life Insurance Corporation of India. It is worth ₹52,878.08 crore (US$ 5.6 billion) and marks the largest strategic disinvestment deal ever, and the largest investment by a foreign financial services company in India.
In a statement, FFHL’s Indian-origin chairman and CEO Prem Watsa said, “This transaction represents a once-in-a-lifetime opportunity to purchase a majority interest in a bank in one of the world’s fastest growing economies and to combine it with a successful and growing insurance company and an established provider of investment banking and wealth management services in the same jurisdiction.”
He said FFHL was “very excited to be selected by the government of India to be the purchaser of the government’s interest in IDBI Bank” and he thanked Prime Minister Narendra Modi and his team “for undertaking a highly transparent and competitive process before selecting us as the buyer”.
{{/usCountry}}He said FFHL was “very excited to be selected by the government of India to be the purchaser of the government’s interest in IDBI Bank” and he thanked Prime Minister Narendra Modi and his team “for undertaking a highly transparent and competitive process before selecting us as the buyer”.
{{/usCountry}}“We assure the Indian government that we are committed to building the world’s finest financial institution from India,” he added.
In May this year, Fairfax acquired a majority stake in IIFL Capital Services Limited. It also established the startup Digit Insurance. “Combining IDBI Bank, Digit, and IIFL Capital would create an entity that is well-positioned to participate in the continued growth and success of Indian markets, and we expect it will provide meaningful and significant benefits to Indian consumers and businesses,” Watsa noted.
The Cabinet decision was announced as both Sidhu and Canada’s foreign minister Anita Anand were in New Delhi. Sidhu left for Mumbai later on Wednesday as the trade mission began. With nearly 300 Canadian executives joining the mission, it is the largest such delegation to India in over 30 years. Sidhu will also visit Bengaluru before leaving India on October 16.
Sidhu met commerce minister Piyush Goyal in Delhi and Mumbai, and a release from Global Affairs Canada, Canada’s foreign ministry, on Tuesday said the two countries were “intensifying their efforts to conclude a mutually beneficial agreement.” That reference was to the comprehensive economic partnership agreement (Cepa), for which the fifth negotiating round concluded in Ottawa just last week.