IDBI Bank slips below Fairfax deal price as investors reassess valuation

IDBI Bank shares fell 2.63% to ₹80.10, dropping below Fairfax Financial Holdings’ proposed ₹81-a-share price despite the bid clearing the lender’s valuation benchmark.

IDBI Bank shares slipped on Wednesday, falling to ₹80.10 on the BSE and moving below the ₹81-a-share price set in the proposed sale of a controlling stake to Fairfax Financial Holdings. The decline left the stock down from levels seen after the deal was approved by India’s cabinet committee, highlighting how investors are reassessing the bank’s near-term value against the transaction price. Business Today reported that the shares lost 2.63 per cent in intraday trade.

The planned transaction covers a 60.72 per cent holding, split between the government’s 30.48 per cent stake and Life Insurance Corporation of India’s 30.24 per cent interest. After the sale, the government would still own 15 per cent of IDBI Bank, while LIC would retain 19 per cent, according to the bank’s earlier explanation of the deal structure.

IDBI Bank has said the ₹81-a-share offer cleared an internal valuation test. In a frequently asked questions note, the lender said two professional valuation firms used separate methods to estimate fair value, producing an average of ₹75.99 a share. That benchmark was below Fairfax’s bid, which the bank said was therefore considered reasonable and approved.

The bank has also noted that the cabinet committee delegated authority to the Alternative Mechanism to handle the sale of the government’s residual minority holding through the open market, in line with the standard operating procedure. It added that LIC would be able to manage its remaining stake under its own internal processes, subject to regulatory requirements. Separately, Economic Times reported that Reserve Bank of India approval gives Fairfax 15 years to trim its IDBI Bank stake to 26 per cent, while the investor also has two years to decide the future of Kerala-based CSB Bank.