The acquisitions by Fairfax India Holding Corp aimed to infuse capital into India ahead of a possible deal to acquire a stake in government-owned IDBI Bank, according to one source familiar with Fairfax.
The Indian government’s recent exemption of foreign investors from capital gains tax on government bonds made this transaction feasible, this source noted.
Fairfax was among those bidding for a stake in the state-owned IDBI Bank. The process has been on hold since March, as bidders had submitted offers below the government’s reserve price, which is the minimum price acceptable to the government.
Talks to revive the stake sale have continued, the previously mentioned source stated, emphasizing that there is no guarantee of reaching a deal.
All five sources requested anonymity as they are not authorized to comment to the media. Fairfax India Holding did not respond to a request for comment from Reuters. India’s Department of Investment and Public Asset Management (DIPAM) also did not reply to inquiries from Reuters.
The Indian government, alongside the state-run Life Insurance Corporation of India, had plans to sell 60.7% of the lender as part of a larger privatization program. The government holds a 45.48% stake in IDBI Bank, while LIC controls 49.24%.
BUYING CONCENTRATED AT THE SHORT END
Fairfax acquired approximately 60 billion rupees ($633.7 million) of the 6.03% 2029 bond, sold at an auction last Friday at a yield 5 basis points below market levels, according to four treasury officials.
The firm likely purchased around 6 billion rupees of the 6.79% 2027 bond and 26 billion rupees of treasury bills maturing in May and June 2027, the treasury officials added.
Fairfax is not typically an active participant in the Indian bond market, the officials noted. According to financial disclosures, Fairfax India reported a fair value of $42.6 million in government securities as of December 2025.
