Fairfax Invests Nearly $1 Billion in Indian Bonds Amid IDBI Bank Deal Talks

Canada-based Fairfax India Holding has acquired nearly $1 billion worth of Indian government securities, marking a rare entry into the domestic bond market as discussions continue around the proposed privatisation of IDBI Bank.

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According to Reuters, the purchases were made last Friday and were aimed at bringing capital into India ahead of a possible transaction involving a stake in IDBI Bank. Fairfax was among the bidders for the government-owned lender, though the disinvestment process has remained stalled since March after bids reportedly came in below the reserve price.

One person familiar with the matter told Reuters that discussions on reviving the stake sale are continuing, although there is no certainty that a deal will materialise.

Bond Purchases Concentrated in Short-Term Securities

Treasury officials cited by Reuters said Fairfax India Holding bought around ₹6,000 crore worth of the 6.03% government bond maturing in 2029. The bond was sold in an auction last Friday at a yield nearly five basis points below prevailing market levels.

The company is also believed to have purchased about ₹600 crore of the 6.79% bond due in 2027, along with treasury bills worth roughly ₹2,600 crore maturing in May and June 2027.

According to the officials, Fairfax is not a regular participant in India’s government securities market.

Tax Relief Improves Investment Appeal

One person close to Fairfax told Reuters that India’s decision to exempt foreign investors in government bonds from capital gains tax played a key role in making the investment viable.

The recent measures, along with initiatives announced by the Reserve Bank of India, have supported foreign participation in the debt market. Overseas investors have increased purchases of Indian sovereign bonds in recent weeks after subdued activity earlier in the year.

IDBI Bank Privatisation Process Remains Uncertain

The Indian government and Life Insurance Corporation of India are jointly planning to sell a 60.7% stake in IDBI Bank under the broader privatisation programme. The Centre holds a 45.48% stake in the lender, while LIC owns 49.24%.

The stake sale process hit a roadblock earlier this year after prospective buyers reportedly submitted offers below the minimum valuation sought by the government. Talks on restarting the process are still underway.
Fairfax India Holding did not respond to Reuters’ request for comment, while the Department of Investment and Public Asset Management did not issue a response.

According to its financial disclosures, Fairfax India held government securities with a fair value of $42.6 million as of December 2025. The latest purchases represent a substantial increase in its exposure to Indian sovereign debt and come at a time when foreign investors are showing renewed interest in domestic fixed-income assets.