Fairfax bought Indian government debt worth nearly $1 billion last Friday, according to five sources, in a rare purchase through the local unit of the Canadian investment holding company.
The purchases by Fairfax India Holding Corp were made to bring capital into the country ahead of a potential deal to buy stake in government-owned IDBI Bank, one of the sources, who is close to Fairfax, said.
India’s recent decision to exempt foreign investors in government bonds from capital gains tax made the transaction viable, according to this source.
Fairfax was among the bidders for a stake in government-owned lender IDBI Bank. The process had been stalled since March this year as potential buyers submitted bids below the reserve price, or the minimum price the government would accept.
Talks over reviving the stake sale have since continued, the source quoted above said, adding there is no certainty of a deal.
All five sources requested anonymity as they are not authorised to speak to media. Fairfax India Holding did not reply to a Reuters query seeking comment. India’s Department of Investment and Public Asset Management (DIPAM) did not respond to Reuters’ queries.
The Indian government and state-owned Life Insurance Corporation of India, had together planned on selling 60.7% of the lender as part of a broader government privatisation programme. The government owns 45.48% of IDBI Bank, while LIC holds 49.24%.
BUYING CONCENTRATED AT THE SHORT END
Fairfax bought around 60 billion rupees ($633.7 million) of the 6.03% 2029 bond, which was sold at an auction last Friday, at a yield that was 5 basis points lower than market levels, four of the sources, all treasury officials, said.
The company also likely bought 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 a regular participant in the Indian bond markets, the officials said. According to financial disclosures, Fairfax India reported holding government securities with fair value of $42.6 million at the end of December 2025.
Source: Reuters.com