Prem Watsa has spent decades building Fairfax Financial into a global insurance and investment group with an appetite for contrarian bets. Now he is preparing to spend Rs 52,878 crore, approximately US$5.56 billion, to acquire a controlling 60.72% stake in IDBI Bank, in what is the largest cross-border banking deal in India.
An Indian-born Canadian investor often called the “Warren Buffett of Canada” for his value-investing philosophy and long-term bets on undervalued businesses, Watsa built Fairfax Financial Holdings into a global giant by reinvesting insurance profits and holding investments through market cycles. His approach has earned him a reputation for buying when others are wary, rather than chasing fashionable assets.
Also Read: Fairfax's IDBI deal premium justified by strategic fit, scale: Analysts
India has been an important part of his strategy, with stakes spanning CSB Bank, Go Digit, IIFL Capital, 5paisa and the privately owned reinsurer Valueattics Re. Fairfax's latest IDBI Bank deal dwarfs its existing Indian financial-sector investments and gives Watsa control of a nationwide banking franchise. The question is what he sees in a bank that the government has spent years trying to privatise.
A turnaround at the right price
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The Cabinet Committee on Economic Affairs approved Fairfax as the strategic buyer on October 14, ending a privatisation process that began in earnest in 2022. The transaction covers the Centre's 30.48% stake and LIC's 30.24% holding. Fairfax's bid values the shares at Rs 81 apiece, putting the deal at approximately $5.56 billion.
Also Read: Cabinet clears way for Watsa's Fairfax's Rs 52,878 crore deal for 60.72% stake in IDBI Bank
IDBI is no longer the distressed institution it once was. Reuters reported that its non-performing asset ratio, which stood at 32% in 2018, had fallen to 2.3% by 2026. The bank has more than 2,000 branches and assets of around Rs 4.44 lakh crore.
The first part of Watsa's biggest India bet is to acquire control after much of the painful balance-sheet repair has already happened. IDBI's recovery has been supported by government and LIC capital, alongside efforts to clean up its loan book. The new owner gets a functioning banking franchise rather than having to rebuild one from scratch.
Prem Watsa' ambitious IDBI Bank plan
The most interesting part is what Fairfax intends to put inside IDBI after taking control. Fairfax plans to transfer its stakes in Go Digit Life Insurance, Go Digit General Insurance and IIFL Capital Services to IDBI Bank, subject to regulatory approvals. The proposed move would bring insurance, investment banking and wealth management under the bank's umbrella.
This is a more ambitious plan than simply improving a lender's margins. A bank gives Fairfax access to deposits and a nationwide customer base. Insurance can generate premium income and create opportunities to sell products to those customers, while IIFL Capital adds capital markets and wealth management capabilities.
Fairfax says its objective is to build a leading Indian financial services company with global ambitions. The idea is to capture more of a customer's financial needs within one group rather than rely on lending alone.
The proposed contributions of Digit and IIFL Capital would require further approvals and are not guaranteed to close alongside the acquisition. Fairfax has also said the IDBI purchase itself remains conditional on completing the required steps. The proposed structure, therefore, is a blueprint, not yet an accomplished fact.
Why a bank, and why India?
Watsa's strategy is based on a larger bet on India's financial sector. He is entering a banking sector that has come a long way from the bad-loan crisis of the previous decade. After years of recognising stressed loans, writing them off and rebuilding capital, Indian banks are in considerably better shape, with gross non-performing assets falling to a multi-decade low of 1.8% in March 2026. Profitability has held up and credit growth has gathered pace, making the sector more attractive to investors looking for a share of India's expanding demand for loans. Foreign investors are increasingly drawn to Indian lenders in recent times by this combination of stronger balance sheets and room for further growth. As households borrow more and businesses seek funding, banks can gain from expanding loan books, provided they price risk sensibly.
A bank also gives Fairfax a large deposit franchise, something its existing financial-sector investments in India cannot offer at the same scale. Deposits can provide a relatively stable funding base for lending, while insurance and investment products offer additional revenue streams. If Fairfax can connect these businesses without compromising underwriting standards, IDBI could become more valuable than the sum of its individual operations.
Fairfax already has a substantial financial services presence through investments including IIFL Capital and online brokerage 5paisa. Reuters put the assets of its listed Indian investment vehicle, Fairfax India Holdings, at $3.8 billion as of June 2026. IDBI will give this portfolio a banking anchor.
The Japanese playbook offers clues
Watsa is entering a market where other foreign investors have reached similar conclusions, although their strategies differ. In May 2025, Japan's Sumitomo Mitsui Banking Corporation agreed to acquire a 20% stake in Yes Bank for Rs 13,483 crore, buying shares from SBI and other existing shareholders.
In December 2025, Japan's Mitsubishi UFJ Financial Group moved to invest $4.45 billion for a 20% holding in Shriram Finance, India's second-largest non-banking finance company. The investment could give MUFG a foothold in a business focused on lending to India's retail and commercial borrowers. Japanese lenders were increasingly looking overseas because of limited growth prospects in their ageing domestic market.
Dubai's Emirates NBD has also made a roughly $3 billion investment in RBL Bank. These deals indicate foreign financial groups are not merely buying exposure to Indian markets but are seeking operating platforms through which they can participate in domestic credit growth.
Watsa's approach is potentially more expansive. Rather than take a minority stake in an established lender, Fairfax is seeking control of IDBI and proposing to combine it with insurance and capital markets businesses.
Is there a catch?
IDBI's turnaround is real, but the bank's improved asset quality may not guarantee superior returns for its new owner. Fairfax must still improve profitability, expand business without allowing bad loans to rise again and persuade customers to buy more products from the group.
There is also a complication in its existing banking portfolio. Fairfax owns about 40% of Kerala-based CSB Bank. Fairfax had submitted a plan to the RBI to resolve the overlapping ownership, with a merger of CSB Bank and IDBI emerging as a possible solution. The regulator's approval will be crucial.
The price is another consideration. Fairfax is offering Rs 81 a share against the government's assessed fair value of Rs 75.99. The government has also retained a combined 34% stake, so Fairfax will need to manage a transition from state-linked ownership while working within India's banking regulations. The proposed insurance and capital markets contributions introduce further approvals and execution risks.
A bet on a platform, not just a bank
Calling Watsa Canada's Warren Buffett captures his reputation for value-oriented investing, but the IDBI transaction is not simply a wager on an undervalued stock. It is a bid to control a large banking franchise and build a wider financial services group around it.
IDBI is promising because it has repaired much of its balance sheet, possesses a national branch network and operates in a market attracting billions of dollars from foreign financial institutions. The challenge is turning those advantages into sustained returns.
If Fairfax can integrate its businesses while keeping credit quality intact, IDBI could become a cornerstone of its India strategy. If it cannot, the acquisition risks becoming an expensive exercise in assembling financial assets without creating enough value between them. This will be the real test of Watsa's biggest Indian bet.