Fairfax in talks to exit IIFL Finance stake ahead of IDBI deal

Fairfax Financial Holdings, the investment firm founded by Indian-born Canadian billionaire Prem Watsa, is in advanced talks with global private equity investors to divest its shareholding in IIFL Finance, according to people familiar with the matter. The move comes as IIFL Finance navigates a potential merger with state-owned IDBI Bank, a development that could reshape the company's ownership structure.

The Canadian holding company, which has maintained a significant stake in the Mumbai-based non-banking financial company, is keen to complete the exit before any formal conclusion of the IDBI Bank deal, the sources indicated. Multiple private equity firms are understood to be in preliminary discussions regarding the acquisition of Fairfax's stake.

Fairfax has been a major investor in IIFL Finance for several years, backing the company through its growth phase in retail lending and financial services. The proposed merger between IIFL Finance and IDBI Bank represents a significant consolidation move in India's banking and financial services sector, as the Reserve Bank of India continues to encourage stronger capital positions among lenders.

The timing of Fairfax's exit strategy suggests that existing investors are seeking clarity on the merged entity's shareholding and governance structure. Neither Fairfax nor IIFL Finance has made public statements regarding the ongoing discussions.