Fairfax to exit IIFL Finance for IDBI Bank acquisition

Canada-based Fairfax Financial Holdings is planning to exit its nearly 11% stake in India's IIFL Finance, according to a report by Business Standard.

Fairfax will use the funds raised from selling this stake to purchase a 60% stake in IDBI Bank from the Government of India and the country's largest insurance company. Two people discussing the matter provided information but requested anonymity as the discussions are private. The process is likely to be completed soon.

Fairfax had acquired a nearly 22% stake in IIFL Finance in 2015, which has decreased over time to approximately 11%. On the other hand, IIFL Finance stated on Tuesday that they will expand their capital base, in which American investment fund Blackstone will purchase 16% equity through convertible shares and warrants.

Neither Fairfax nor IIFL provided an immediate response to emails seeking comments on this matter.

IDBI Bank Limited is a scheduled commercial bank owned by the Life Insurance Corporation of India (LIC) and the Government of India. It was established in 1964 as IDBI, which was a wholly-owned subsidiary of the Reserve Bank of India and a development financial institution providing financial services to the industrial sector.