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Canadian firm Fairfax Financial Holdings’ proposed $5.5 billion takeover of IDBI Bank is facing pushback from employees of the Indian state-owned lender and political parties in the country.
Worker Opposition and Strike Calls
The United Forum of IDBI Officers and Employees called for a two-day nationwide strike against the sale of the bank to Fairfax. The workers’ union also expressed grave concerns about the transparency of the sale and valuation process, according to a post on X.
The union is demanding that the government cancel the privatization process and instead focus on strengthening the bank while protecting public investment and employees’ interests.
Political Pushback and Government Defense
Rahul Gandhi, India’s leader of the opposition, extended support to the IDBI Bank employee unions opposing the takeover by Fairfax. Public banks are not assets to be sold off, they are tools to build the nation, Gandhi stated on Thursday.
He added that the sale of over a 60% stake in IDBI Bank to Fairfax goes against the commitment of previous governments to hold a 51% stake in the state-owned lender.
Nirmala Sitharaman, India’s finance minister, responded by stating that the public sector bank was handed to the government in poor shape and was revived through professionalism, prudence, and recapitalization of more than 250 billion rupees, equivalent to $2.6 billion.
The finance minister stated that the IDBI Bank is now poised for its next phase of growth. The government has previously stated that the next phase of growth will be driven by a strategic investor.
Valuation Concerns and Share Details
The Indian government announced on Oct. 14 that the sale of over 60% of the shares in IDBI will mark the largest foreign direct investment transaction in India’s financial sector. Fairfax made a bid to pay 81 rupees per share for IDBI against the average fair value set at 75.99 rupees apiece.
Shares of IDBI opened at around 79 rupees per share on Monday.
However, Indian media outlet Businessworld reported on Thursday that government officials had suppressed the valuation of IDBI to make Fairfax’s offer seem attractive. The Ministry of Finance defended its procedure, stating that the bidding process was a double blind as the bidder did not know the valuation and the valuators did not see the bids.
The Indian government has been divesting stakes this year as it pushes to keep the country’s growth engine running amid deepening fiscal pressures, having sold shares in several companies including Cochin Shipyard, Indian Railways Finance Corp, NHPC, and Coal India. In August, the government secured $3.3 billion for a 6.5% stake in the country’s top life insurer, Life Insurance Corporation of India.
