Fairfax Financial Holdings' proposed $5.5 billion takeover of IDBI Bank faces resistance from Indian workers and opposition politicians. The United Forum of IDBI Officers and Employees called for a two-day nationwide strike on Sunday, citing grave concerns about transparency in the sale and valuation process. The union demanded the government cancel the privatization and instead strengthen the bank while protecting public investment and employees' interests.
Opposition leader Rahul Gandhi backed the unions in a Thursday statement, saying public banks are tools to build the nation, not assets to sell off. He noted the sale transfers over 60% of IDBI to Fairfax, violating prior government commitments to maintain a 51% stake in the state-owned lender.
Finance Minister Nirmala Sitharaman responded that IDBI Bank arrived in poor shape and was revived through professionalism, prudence, and over 250 billion rupees in recapitalization. She said the bank is now positioned for its next growth phase, which the government said will be driven by a strategic investor.
Fairfax bid 81 rupees per share for IDBI on October 14, above the average fair value of 75.99 rupees per share. IDBI shares opened at around 79 rupees on Monday. The Indian government called this the largest foreign direct investment transaction in India's financial sector.
Businessworld reported Thursday that government officials suppressed IDBI's valuation to make Fairfax's bid appear attractive. The Ministry of Finance defended the process as a double blind bidding, where Fairfax did not see the valuation and valuators did not see the bids.
India has divested stakes in multiple companies this year, including Cochin Shipyard, Indian Railways Finance Corp, NHPC, and Coal India. In August, the government received $3.3 billion for a 6.5% stake in Life Insurance Corporation of India.