Fairfax Mulls Selling IIFL Finance Stake to Finance IDBI Bank Takeover

Fairfax Financial Holdings Ltd., the Toronto‑based conglomerate run by Indian‑born billionaire Prem Watsa, is reportedly weighing a full sale of its stake in IIFL Finance Ltd. The move appears to be a way to raise cash for a much‑talked‑about bid for IDBI Bank Ltd., where Fairfax is said to be close to sealing a 60.7% purchase.

According to people familiar with the matter, Fairfax holds about 15.2% of IIFL Finance – a mid‑size shadow lender that today is valued at roughly $2.98 billion. The shareholders are said to be in early‑stage talks with a handful of global private‑equity firms about buying the entire position. Nothing is final yet, and the discussions could shift as market conditions evolve.

If the deal goes ahead, the proceeds from the IIFL Finance sale would help bankroll the IDBI Bank acquisition, which at current market prices is estimated at around $6.2 billion. Such a transaction would likely become the biggest foreign investment ever in an Indian bank, underscoring how attractive the country’s financial services sector has become for overseas investors.

Regulators will probably require Fairfax to tidy up its existing Indian exposures before the IDBI deal closes. The company already owns about 40% of CSB Bank Ltd. and has recently moved to increase its stake in IIFL Capital Services Ltd., a wealth‑management and capital‑markets outfit. Sources say Fairfax plans to fold IIFL Capital into a wholly‑owned subsidiary after the IDBI deal is completed.

India’s banking and lending landscape has seen a flurry of interest lately. Last year, Blackstone pumped more than $700 million into Federal Bank for a 9.9% slice, and other private‑equity houses are eyeing similar opportunities as household savings pour into formal channels and credit demand climbs.

Both Fairfax and IIFL Finance declined to comment when approached for this story. The negotiations are still at a preliminary stage, and any final decision will hinge on approvals from Indian authorities and the willingness of potential buyers to match Fairfax’s price expectations.