Q1.  Who is the Strategic Buyer for the IDBI Bank Ltd.?

Answer: M/s 10955230 Canada Inc. (parent entity M/s Fairfax Financial Holdings Ltd.) has been approved as the Strategic Buyer for the IDBI Bank Ltd.

Q2.  What is the size of this Transaction?

Answer: The purchase consideration for this transaction is Rs.52,878.0806181 Crores (in words Rupees Fifty-Two Thousand Eight Hundred Seventy-Eight Crore Eight Lakh Six Thousand and One Hundred Eighty-One only).

Q3.  How will it be split between the Government of India (GoI) and the Life Insurance corporation of India (LIC)?

Answer: 60.72% stake out of the total shareholding of the IDBI Bank Ltd is being sold through this transaction, comprising 30.48% shareholding held by the Gol and 30.24% shareholding held by the LIC. The proceeds will be divided in the same proportion.

Q4.  How many entities were involved in the bidding process?

Answer: Of the five parties who initially submitted their Expression of interest, four parties qualified as per the eligibility criteria and disqualification conditions prescribed in the Preliminary Information Memorandum (PIM), of which, two finally submitted their techno- financial bids and became Qualified Bidders (QBs) for this transaction.

Q5.  What methodologies were used for the valuation of IDBI Bank Ltd.?

Answer: The fair value of the enterprise was determined using two alternate methodologies, namely the Market Multiple Method and the Asset Valuation Method.

Q6.  Who carried out the valuation exercise?

Answer: The valuation of enterprise was carried out by two independent, professional valuation agencies appointed for the purpose. Their names cannot be disclosed due to confidential guarantees enshrined in the process.

Q7.  What role did the stock market price play in the valuation of the IDBI Bank?

Answer: The volatile stock market price of the narrowly traded IDBI stock fluctuated both above and below the bid offer price (low high range of Rs.61.01 to Rs.118.38 over the valuation period). It was disregarded, as it tended to misalign the valuation with the intrinsic value of the enterprise, and instead, relative valuation by the market multiple method, which overcomes this problem, was used to determine the fair market value of the enterprise based on the 31^st March, 2026 closing accounts for all public sector banks.

Q8.  How have the assets, including land and properties, been valued for the IDBI Bank?

Answers: The Asset Valuation Method, which considered both tangible and intangible assets, including land and properties, along with the liabilities, was used to determine the fair net asset value of the enterprise as per the 31st March, 2026 audited accounts of the IDBI Bank.

Q9.  What was the benchmark price used for this transaction?

Answer: The average of the two independent valuations (Rs.75.99 per share) served as the benchmark price for the evaluation of the qualified bids. The winning bid was found to be higher than the benchmark price as well as the fair value estimates of both the independent valuation agencies.

Q10.  How was the benchmark price determined?

Answer: The benchmark price was the average of the fair market value determined by the Market Multiple Method and the fair net asset value determined by the Asset Valuation Method.

Q11.  What is the further course of action?

Answer: The Successful Bidder would now present its credentials to the RBI in accordance with the ‘Fit & Proper’ assessment conducted at the EoI stage and submit a roadmap for the compliance of regulatory conditions prescribed therein.

Q12.    What is the residual equity stake left with the GoI and the LIC?

Answer: GoI will retain 15% residual equity stake while the LIC will retain 19% equity stake. Both of them will withdraw their nominees from the Board and become public shareholders.

Q13.    How will the GoI and LIC dissolve their residual shareholding in the IDBI Bank?

Answer: The Cabinet Committee on Economic Affairs has delegated powers to the Alternative Mechanism to undertake minority stake sales of the residual GoI shareholding through the open market in accordance with the standard operating procedure. The LIC will be free to manage its residual shareholding in accordance with its internal procedures while ensuring compliance with the direction of its regulators.

Q14.    What impact will it have on the banking sector and the economy at large?

Answer: It will have a significantly positive effect on the banking and financial sector of our economy. The IDBI Bank, post-privatization, would be able to generate funds without any dependence on government assistance as has been the experience in the past. It is expected that the strategic buyer will infuse private capital, bring-in new technology and better management practices, which will help enhance its business potential and make it more competitive for both credit and deposit growth.

Q15. What impact will it have on India’s external sector at the time of geo-political strain?

Answer: It will be the largest FDI in the financial sector of our economy so far, and will help generate a positive sentiment for economic reforms, while improving the investment climate in the country at large.

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