The $5.6 billion sale giving Fairfax Financial Holdings Ltd. control of IDBI Bank Ltd. won approval Wednesday. It is the largest foreign investment seen in India's banking industry and comes from Canadian billionaire Prem Watsa's firm.
In a twist for a multibillion dollar transaction, Fairfax and IDBI opted to run the deal themselves instead of initiating any formal search for financial advisers. No major investment banks were involved at this stage.
Running the work in house would likely have saved Fairfax and IDBI millions in fees, despite India already being known for thinner advisory payouts. The trade off: investment bankers lost a potential payday and a bump in the league tables.
Fairfax and IDBI might yet hire an investment bank at a later stage to handle the open offer to shareholders. Representatives for IDBI, Fairfax and the Finance Ministry did not immediately respond to requests for comment.
When big developments attract attention, a clear daily summary helps, sign up for the free Market Briefs
Prime Minister Narendra Modi's government has tried for years to sell the Mumbai based lender as part of a broader push to reduce state ownership in banks. Progress had often been bogged down by obstacles, including postponed regulatory approvals.
KPMG was engaged to advise the government. A deal announcement noted that two professional firms assisted in setting a fair valuation for New Delhi, while not identifying any additional advisers.
India continues to keep a tight grip on ownership structures and voting rights, but it has become more open to foreign interest in banking assets. Major global investment banks advised on those deals.
A record sized bank deal executed without the typical adviser lineup underlines two forces in India's financials: costs matter even in a low fee market, and policy is tilting toward more foreign participation while oversight stays strict. If Fairfax later hires a bank for the shareholder offer, fee pools could reappear, but the bigger signal is clear - sizable foreign capital is being welcomed into Indian banking.
If you want timely context without the noise, get concise updates each morning with Market Briefs newsletter
