The planned $5.5 billion acquisition of India's IDBI Bank by Canada's Fairfax Financial Holdings is encountering strong opposition from the bank's employees and political figures in India. Dissent is mounting. The United Forum of IDBI Officers and Employees has announced a nationwide two-day strike to protest the sale. They are voicing concerns about the transparency and valuation of the deal.
On social media platform X, the workers' union demanded that the government halt the privatization process. Their message was unequivocal: focus on strengthening the bank and safeguarding public investment and employee interests. The union's protest is part of a broader wave of dissatisfaction with the handling of the proposed sale.
Rahul Gandhi, a prominent opposition leader in India, has expressed support for the IDBI Bank employees. He criticized the government for planning to sell more than 60% of the bank's stake to Fairfax. This, he argued, contradicts earlier promises to retain a 51% government stake in the bank. Gandhi emphasized that public banks should be seen as tools for nation-building, not as assets to be sold off.
Nirmala Sitharaman, India's finance minister, responded to the backlash by defending the government's decision. She noted that IDBI Bank was struggling when the government took control. Since then, professional management and a recapitalization effort of over 250 billion rupees ($2.6 billion) have turned it around. Sitharaman stated that the bank is now set for expansion, with growth expected to come from a strategic investor.
On October 14, the Indian government announced that the sale of more than 60% of IDBI's shares would represent the largest foreign direct investment in India's financial sector. Fairfax offered 81 rupees per share, exceeding the average fair value of 75.99 rupees. Nonetheless, IDBI shares opened at around 79 rupees on Monday.
Concerns about the valuation process have been raised by Indian media outlet Businessworld. Reports suggest that government officials might have downplayed the bank's valuation to make Fairfax's offer appear more attractive. The Ministry of Finance has defended its methods, stating that the bidding process was a "double blind, " ensuring that bidders and valuators did not know each other's figures.
The proposed sale is part of a broader strategy by the Indian government to divest stakes in multiple companies to sustain economic growth amid fiscal challenges. Throughout this year, the government has sold shares in several state-owned enterprises, including Cochin Shipyard, Indian Railways Finance Corp, NHPC, and Coal India. In August, the government raised $3.3 billion by selling a 6.5% stake in Life Insurance Corporation of India, the country's leading life insurer.
