look news india
A very important and positive statement from the Government of Canada has come soon after the Central Cabinet (CCEA) approved the purchase of 60.72% stake by Fairfax Financial Holdings in IDBI Bank – one of the largest disinvestment and banking deals in the financial history of India. Emphasizing on bilateral investment and trade partnership, Canada’s International Trade Minister Maninder Sidhu has said that Canada has already made huge capital investment of about $ 107 billion (about ₹ 8.9 lakh crore) in India and after the success of the IDBI Bank deal, there is immense scope for investing more capital in India. Specifically mentioning the development of infrastructure, the Canadian Trade Minister said that Canadian companies, institutional investors and veteran pension funds are fully prepared to participate on a large scale in the construction and expansion of new airports and expressway/highway networks to meet India’s growing aviation and transport needs.
Canadian Trade Minister Maninder Sidhu, in an exclusive interview to news agency ANI, openly praised Indian-origin Canadian billionaire and ‘Warren Buffett of Canada’ Prem Vats. He said, “We have a very deep respect for Fairfax and Prem Vats for the ground-breaking work they are doing in India. They are helping to build world-class airports in India. When you look at India’s huge infrastructure needs, that’s where Canadian companies, global financial institutions and pension funds are leading the way.” It is noteworthy that Prem Vats-led Fairfax India had played a central role in the expansion of its world-class Terminal-2 by purchasing a majority stake in Bengaluru’s Kempegowda International Airport (KIA), one of the busiest and modern airports in the country. Now after acquiring the ownership rights of IDBI Bank, this Canadian group has emerged as a major pivot in both India’s financial and aviation infrastructure.
The Union Cabinet Committee on Economic Affairs (CCEA) has given final approval to the proposal to sell the government’s 30.48% stake in IDBI Bank and 30.24% stake in Life Insurance Corporation of India (LIC)—taking together 60.72% equity—to a subsidiary of Canada’s Fairfax Financial Holdings (10955230 Canada Inc.).
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Bargain Price: Fairfax has bid at ₹81 per share, which is higher than the fair value benchmark of ₹75.99 set by rating agencies. The value of the entire deal comes to ₹52,878 crore (about US$5.6 billion).
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Historical Milestone: It is the largest strategic deal in India’s disinvestment history after Tata Group’s purchase of Air India for ₹18,000 crore, and is also the largest ever foreign direct investment (FDI) in the Indian banking sector.
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Presence of government and LIC continues: Even after this disinvestment, LIC will continue to hold about 19% stake in the bank and the Central Government will hold about 15% stake, while Fairfax will retain the original name of the bank as ‘IDBI Bank’ for the next three years.
Canadian Trade Minister Maninder Sidhu underlined that the economies of India and Canada are complementary to each other. India, the world’s fastest growing major economy, needs trillions of dollars of long-term capital to build roads, logistics hubs, renewable energy and airports over the next decade. Canada, on the other hand, has some of the world’s largest, safe and mature pension funds (e.g. CPPIB, CDPQ, OTPP, OMERS) that seek stable and reliable markets for long-term returns. Sidhu stressed that despite the current investment of $107 billion, there is immense scope for further huge expansion. Canadian funds have already invested billions of dollars in India’s National Investment and Infrastructure Fund (NIIF), toll-operate-transfer (TOT) national highway projects and power grids and are now keen to bid in privatization tenders for new greenfield airports.
Cabinet approval for the IDBI Bank deal and this statement by the Canadian Trade Minister are also considered extremely important from the geopolitical point of view. Despite diplomatic tensions between New Delhi and Ottawa over the past few months, there has been no pause in grassroots business and corporate ties. This statement of the Canadian Minister makes it clear that global institutional investors look at India’s growth story, economic stability and policy reforms more than political statements.
The entry of Canadian expertise will be very important amid the Indian Government’s ‘UDAN’ scheme and its ambitious plan to develop more than 100 new airports and waterdromes across the country in the next 5 to 10 years. Canadian engineering, aviation management and financial models can now be used to build modern airport terminals, air cargo hubs and greenfield airports in tier-2 and tier-3 cities. This alliance of Fairfax and IDBI has proved that India’s financial and infrastructure sector remains the world’s most preferred and safe destination for foreign investors.