The Union Cabinet on Wednesday approved the acquisition of 60.72% stake in IDBI Bank, a subsidiary of Canadian financial services company Fairfax Financial Holdings. Approval has been given to sell this stake for Rs 52,878.08 crore.
The Cabinet Committee on Economic Affairs (CCEA) headed by Prime Minister Narendra Modi has approved Fairfax as the strategic buyer of IDBI Bank. This deal includes sale of 30.48% stake of the government in IDBI Bank and 30.24% stake of Life Insurance Corporation of India (LIC).
However, now after this stake sale, the government will retain 15% stake in the bank, while LIC will have 19% stake. Their combined stake will be 34%. Union Minister Ashwini Vaishnav said that once this deal is completed, it will be the largest Foreign Direct Investment (FDI) in India’s financial sector.
The sale was announced in 2022
This sale has many approvals, disinvestment But this followed a two-step bidding process overseen by several government bodies, including a core group of secretaries and an empowered group of cabinet ministers. The sale process of IDBI Bank was initially announced in 2022, but was delayed due to regulatory and process hurdles. It was put on hold in March after the bids failed to meet the government’s expectations. But now it has been finalized and approval has been received from the cabinet.
Share jumped 13 percent
Before the cabinet approval, there was a big rise in its shares in the stock market. An increase of 13% was recorded in the shares of IDBI Bank Limited. This rise in shares came before the second quarter results to be announced on October 17. Shares of IDBI Bank had increased to Rs 93.62 during intraday compared to the previous closing price of Rs 82.92 in the current session. However, later this share rose by 8.33% and closed at Rs 89.85.
(Note- Before investing in any share, take the help of your financial advisor.)
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Source: www.aajtak.in
