Fairfax plans to fold Indian financial holdings into IDBI Bank

By Reuters News

MUMBAI, Oct 15 (Reuters) - Fairfax plans to bring its existing Indian financial investments under IDBI Bank IDBI.NS, creating a diversified financial services group, the Canadian investment group said in a statement.

India on Tuesday approved the sale of a 60.7% stake in IDBI Bank to Fairfax Financial Holdings FFH.TO in a deal valued at 528.78 ‌billion rupees ($5.56 billion), making it one of the country's largest cross-border banking transactions.

As part of the deal, Fairfax plans to transfer its 30.2% stake in IIFL Capital Services IIFS.NS and 49% stake in Digit to IDBI Bank, making the lender the holding company for the three businesses.

The proposed structure would span banking, insurance, investment banking and wealth management.

Digit, founded by Kamesh Goyal, comprises Go Digit General Insurance and Go Digit Life Insurance. IIFL Capital Services, founded by Nirmal Jain and R Venkataraman, runs investment banking and wealth management businesses.

Fairfax is in the process of raising its stake in IIFL Capital to 51% through an open offer, according to the company.

The restructuring is subject to approvals from the banking and insurance regulators.

The proposed combined entity will be led by Rakesh Sharma, the current chief executive officer of IDBI Bank.

CV Rajendran, the former chief executive officer of CSB Bank, and NS Kannan, the former managing director and CEO of ICICI Prudential Life, would take leadership roles, with Kannan serving as chairman, according to the company.

Fairfax said it does not expect any changes to the governance, management or operating structure of Digit or IIFL Capital as a result of the proposed restructuring.

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