$5.5 billion takeover proposed by Canadian company Fairfax Financial Holdings IDBI Bank It faces pushback from employees of India’s state-run financial institutions and the country’s political parties.
On Sunday, a unified forum of IDBI officers and employees called for a two-day “nationwide” strike against the sale of the bank to Fairfax. The union also expressed “serious concerns” about the transparency of the sale and valuation process, according to a post on X.
It calls for the government to “stop the privatization process” and instead focus on strengthening banks while protecting public investment and employee interests.
Last week, India’s opposition leader Rahul Gandhi extended support to IDBI Bank’s employee union, which opposes the Fairfax takeover. “Public banks are not assets to be sold. They are tools for nation building,” Gandhi said in a statement on Thursday.
He added that selling more than 60% stake in IDBI Bank to Fairfax goes against the previous government’s promise to hold 51% stake in the state-owned financial institution.
India’s Finance Minister Nirmala Sitharaman said in her response that the public sector bank was handed over to the government in “bad condition” and had been resuscitated with “professionalism and prudence” and a recapitalization of more than 250 billion rupees ($2.6 billion).
“IDBI Bank is now poised for the next phase of growth,” the finance minister said. The government has previously said the next phase of growth will be driven by strategic investors.
The Indian government announced on October 14 that the sale of more than 60% of IDBI’s stake would be the largest foreign direct investment transaction in India’s financial sector. Fairfax made a bid for IDBI paying Rs 81 per share against an average fair value set at Rs 75.99 per share.
On Monday, IDBI shares opened at around Rs 79 per share.
However, Indian media outlet Business World reported on Thursday that government officials were holding back IDBI’s valuation to make Fairfax’s offer look more attractive. The Treasury defended its procedures, adding that the bidding process was “double-blind” as bidders did not know the valuations and the valuers did not see the bids.
India’s government is selling stocks this year to keep the country’s growth engine running amid deepening fiscal pressures. It sold stakes in several companies including Cochin Shipyards, Indian Railway Finance Corporation, NHPC and Coal India. In August, it acquired a 6.5% stake in Life Insurance Corporation of India, India’s largest life insurance company, for $3.3 billion.
