Did Fairfax get IDBI Bank at a 10% discount? Why the screen price was the misleading number

Did Fairfax get IDBI Bank at a 10% discount?

Written on 19 October 2026, based on public reports at that time.

In October 2022, the government invited bids for IDBI Bank.

In February this year, the bids came in below its reserve price of Rs. 94.42 a share. The process was run again.

Last Wednesday, it approved the sale of 60.72% to Fairfax at Rs. 81 a share. That same day, the share had closed at about Rs. 90 on the exchange.

So a buyer got control of a listed bank at 10% below the screen price?

The first reaction most people have is that the seller got a bad deal. I think the market price was the misleading number here.

Before this deal, the government and LIC together owned close to 95% of the bank. Only about 5% of the shares were with the public. When so few shares trade, a little buying or selling moves the price a lot. During the valuation period, the stock swung anywhere between Rs. 61 and Rs. 118.

That is the price of a small, scarce slice. It says very little about what a 60% block is worth.

Two independent valuers looked at the bank’s assets and at how similar banks are priced. Their average came to Rs. 75.99. Fairfax paid about 7% more than that.

Why should this matter to you if you never touch bank shares?

I meet promoters who value their entire holding at the last traded price of their SME listed share, where a few thousand shares change hands in a week. I meet families who value a 60% stake at the price an uncle paid for 2% years ago. Sometimes lenders use those numbers too.

So before you put a number on your stake, ask a few plain questions. How much of the company actually trades? How many days of normal volume would it take to sell what you own? And does a proper valuation on assets and comparable companies come anywhere close to the screen price?

If the answers are far apart, the screen price is the number to doubt.

The screen shows what someone paid for a few shares. A buyer for the whole block will always do his own maths.