Fairfax Financial Holdings will acquire a 60.72% stake in IDBI Bank for around ₹53,000 crore ($5.5 billion), in what is poised to become the largest foreign investment in an Indian bank.
Fairfax will engage former HDFC Chairman and former HDFC Bank Deputy MD Paresh Sukthankar, as advisors to help it with its proposed acquisition, the Hindu BusinessLine reported on Friday, 16 October.
The deal was approved by the Cabinet Committee on Economic Affairs (CCEA), and the Canadian company will purchase the government’s 30.48% stake (for about ₹26,620 crore) and state-run Life Insurance Corporation of India’s () 30.24% (for about ₹26,440 crore), as per a PTI report.
What’s in store for acquired IDBI Bank?
Billionaire founder expects that the new combined company will continue to be led by IDBI’s current CEO and MD Rakesh Sharma, the HBL report said, adding that Fairfax has sorted out its leadership picks for the lender.
The executive suite will reportedly comprise former CSB Bank CEO CVR Rajendran, and NS Kannan, former MD and CEO of ICICI Prudential Life Company MD and Chief Financial Officer of ICICI Bank. The report added that Kannan is set to take up the role of Chairman, subject to RBI approval.
Notably, the sale process for began in 2022 and faced a setback earlier this year when initial bids fell below the government’s reserve price. The deal is awaiting approval from the central bank, which will conduct a “fit and proper” assessment, and the Competition Commission of India (CCI) and other statutory authorities, the PTI report added.
Who are Deepak Parekh and Paresh Sukthankar?
Chairman of the erstwhile non-banking finance company HDFC, Deepak Parekh stepped down from his position in June 2023 after the merger of HDFC and . He dubbed the merger as the biggest transaction in India’s corporate history and the proposed entity will have combined assets of ₹18 lakh crore.
Parekh joined his uncle’s newly formed Housing Development and Finance Corporation in 1978 as an assistant general manager and turned the mortgage lender into a behemoth. He also spearheaded entry into it with the creation of HDFC Bank.
Over the years, he also held positions as non-independent, non-executive chairman of HDFC Asset Management (a subsidiary of HDFC which runs HDFC Mutual Fund); non-executive chairman of HDFC ERGO General Insurance, HDFC Life Insurance, Glaxo India Ltd, Burroughs Wellcome (India) Ltd, IDFC Ltd and GlaxoSmithKline Pharmaceuticals Ltd; and chairman of IDFC Private Equity Co Ltd.
Meanwhile, HDFC Bank’s former Deputy MD resigned from the lender in August 2018 after a 24-year stint which began in 1994. He was promoted to the post from Executive Director role in March 2017. Analysts and watchers had credited the executive for “taking up the reins after Aditya Puri (then HDFC Bank CEO)”, according to a report by the Financial Express.