Fairfax Financial Holdings’ Indian arm bought nearly $1 billion of Indian government debt last Friday in a rare market move, Reuters reported, citing five people who spoke on condition of anonymity.
The purchases were made to bring capital into India ahead of a possible deal to buy a stake in government-owned IDBI Bank, one of the sources, who is close to Fairfax, told Reuters. India's recent decision to exempt foreign investors in government bonds from capital gains tax made the transaction commercially workable, according to that source.
Fairfax was among the bidders for a stake in IDBI Bank, but the sale process had stalled since March after potential buyers submitted offers below the reserve price, the minimum the government would accept. Talks to revive the stake sale have continued, the same source said, while adding there is no certainty of a deal.
The Indian government and state-owned Life Insurance Corporation of India had together planned to sell 60.7% of the lender as part of a broader privatization programme, according to Reuters. The government owns 45.48% of IDBI Bank, while LIC holds 49.24%.
The bond buying was concentrated at the short end. Fairfax acquired around 60 billion rupees ($633.7 million) of the 6.03% bond maturing in 2029, sold at auction last Friday at a yield five basis points below prevailing market levels, four of the sources, all treasury officials, said. The company also likely purchased around 6 billion rupees of the 6.79% bond maturing in 2027 and 26 billion rupees of treasury bills due in May and June 2027, the treasury officials said.
Fairfax is not a regular participant in Indian bond markets. Financial disclosures cited by Reuters show Fairfax India held government securities with a fair value of $42.6 million at the end of December 2025, a fraction of the scale of last week's purchases.
All five sources requested anonymity as they were not authorized to speak to media. Fairfax India Holding did not reply to a Reuters query seeking comment, and India's Department of Investment and Public Asset Management did not respond to Reuters' queries.
No deal has been confirmed, and the sources who described the bond purchases as preparation for a possible transaction stopped short of saying one is close.
