MUMBAI: With Kotak Mahindra Bank formally exiting the bidding process for the 61% stake in IDBI Bank being divested by the government and LIC, the contest has narrowed to just two foreign bidders—Fairfax Holdings, led by Canadian NRI businessman Prem Watsa, and UAE government-owned Emirates NBD, which recently acquired a 60% stake in RBL Bank.
The Kotak announcement late Friday led to the IDBI stocks getting hammered in morning trade, tanking more than to Rs 102.91 from the previous close Rs 106.68. However, the bank’s shares have risen 40% in the last 12 months.
Arunish Chawla, the secretary in charge of the divestment process, had Friday confirmed in an X post Friday night that the financial bid have been submitted but did not disclose how many bidders are in or naming them. He further said the bids will be assessed according to the prescribed procedure.
While for Kotak, quitting the IDBI race reportedly on valuation concerns, only weakens its bid to make a strong comeback. Since the founder Uday Kotak left the bank months before his term was to end in late 2021, the bank has been struggling on every parameter, especially on its storied asset quality front. Buying a bank like IDBI which has a large franchise was sure-shot way to scale up his bank. While IDBI share rose 40% this fiscal, Kotak has just inched up 8%.
Submission of final financial bids from shortlisted bidders moves the transaction into its decisive evaluation phase now. Now the financial bids will be evaluated by the inter-ministerial group and the highest bidder will be identified after the evaluation, following which the proposal will move through the required approval process, including consideration by the Cabinet.
The government is confident of completing the process within this fiscal which may fetch at least Rs 33,000 crore to it.
Initially there were four bidders who cleared the fit and proper criteria of the Reserve Bank—Kotak Bank, Fairfax, Emirates NBD and the US-based private equity firm Oaktree Capital.
It can be noted that Fairfax India Holdings Corporation, the Toronto-based firm founded in 2014 and controlled by the Andhra born Watsa’s Fairfax Financial, holds significant investments in infrastructure, financial services, and logistics, including major stakes in Bangalore Airport, CSB Bank, and IIFL group companies and as of December 2025 these investments value tops %7 billion.
While it owns 64% of Bangalore International Airport, in the financial services space it has substantial holdings in CSB Bank, IIFL Finance, IIFL Wealth (now 360 One), and 5paisa Capital. Its other investments include Seven Islands Shipping, Saurashtra Freight (51% stake sold in late 2025), and Fairchem Organics.
On the other hand, Emirates NBD, which has paid a whopping $3 billion for a 60% stake in the struggling RBL Bank last August, this would be the biggest deal if it goes through, which analysts feel is more likely given its sovereign ownership and the very warm diplomatic and business relationships between both the governments. In fact, many pointed out that its RBL deal was done so easily because of this double ties.
The government and Life Insurance Corporation are jointly selling a 60.72% of their close to 95% holding in IDBI Bank, which it has been working on since 2021. While the government will dilute 30.48% of its 45.48% stake in IDBI Bank, while LIC which holds 49.24% will sell 30.24%.
The strategic sale involves the transfer of management control along with a majority stake in the bank. The privatisation process gained momentum after the lender exited the Reserve Bank’s prompt corrective action framework in March 2021 following improvements in asset quality which had plunged to more than 34% before, capital adequacy and profitability.
The IDBI Bank deal is among the most closely watched strategic disinvestment deals currently underway and is seen as a test case for privatisation in the banking sector. A successful closure would bolster government’s non-tax revenue receipts and signal progress on its reform agenda, particularly at a time when asset sales have faced delays due to market conditions and regulatory complexities.
The disinvestment process, formally launched in October 2022, has faced delays as the government worked through procedural and regulatory requirements to facilitate a potential sale.