Shares of IDBI Bank rose nearly nine percent on Wednesday. This increases the market capitalization of the company by Rs. 8,086 crores has increased. An overall bearish trend was observed in the domestic stock market during this period. After the market closed on Wednesday, it was reported that the Union Cabinet had approved the sale of 60.72 per cent stake in IDBI Bank to Fairfax Financial Holdings for Rs. 52,878 crores has approved the sale proposal. This is the country’s biggest strategic disinvestment since the sale of Air India. The deal is also likely to give a new direction to the process of privatization of government-controlled banks. However, shares of IDBI Bank have seen a tremendous jump.

Stocks rose, valuations rose

Shares of IDBI Bank rose 9.07 percent on BSE to Rs. was 90.44. During trading it rose 12.90 percent to Rs. It reached 93.62. On the NSE, the bank’s share rose 8.98 percent to Rs. closed at 90.39. The market capitalization of the bank is Rs. 8,085.82 crore increased to Rs. 97,244.73 crores. Meanwhile, BSE’s 30-share benchmark index Sensex closed down 251.89 points, or 0.34 per cent, at 72,781.89. At the same time, NSE’s 50-share benchmark Nifty closed down 99.25 points, or 0.44 per cent, at 22,622.70 points.

This will be dealt with by the company

Canada’s Fairfax Financial Holdings is about Rs. 53,000 crore ($5.5 billion) to acquire 60.72 percent stake in IDBI Bank. This will be the largest ever foreign investment in an Indian bank. Also, this is an important milestone in the much-awaited process of privatization of the banking sector in the country. The Cabinet Committee on Economic Affairs has approved M/s 10955230 Canada Inc., a subsidiary of Fairfax, as a strategic buyer. This company is about Rs. 26,620 crore with 30.48 per cent share of the government and 30.24 per cent share of the public sector Life Insurance Corporation of India (LIC) at around Rs. 26,440 crore will be bought. Canadian businessman Prem Vats-led Fairfax will pay Rs 81 per share, according to an official statement. Per share fixed by these two independent valuation agencies is Rs. 75.99 is more than fair value.

This process started in 2022

The biggest deal in the banking sector is a significant achievement in the long overdue efforts to privatize IDBI Bank and reduce government stake in commercial enterprises. The process of selling the stake started in 2022. Earlier this year, the government halted the sale process after financial bids fell below the reserve price. Finance Minister Nirmala Sitharaman termed the deal as an important achievement, saying the government helped the bank emerge from the financial crisis and is now accelerating the next phase of its growth through the proposed restructuring while retaining a minority stake. The finance minister said the move would strengthen India’s banking system and help bring bank services at par with global standards. This confirms that India’s growth story is strong, that its economy has the capacity to overcome challenges and that the government is committed to reforms.