The shares of IDBI Bank jumped nearly 4 percent on December 12 after a report said that Toronto-based Fairfax Financial has emerged as the frontrunner in the race to acquire controlling stake in the Indian lender from the government and the Life Insurance Corporation of India (LIC).

The shares of the bank were trading at Rs 98.95 apiece, as seen at 12.25 pm on Friday, the highest level seen by the stock in seven sessions. The stock has now extended gains for the second consecutive session.

Fairfax Financial, which was founded by Indian-Canadian billionaire Prem Watsa, is considering an all-cash offer matching IDBI's current market value, the Economic Times reported citing people familiar with the matter, ahead of a December-end deadline for submission of financial bids for the lender.

Fairfax is competing with Kotak Mahindra Bank, which is another strong contender in the race, the report said, adding that the private lender is considering a bid in a combination of cash and shares. However, Fairfax's all-cash offer has made it the front-runner in the race, the report further said.

Emirates NBD, who had earlier submitted an expression of interest, is rethinking its participation in the final bidding process after it recently concluded its agreement to buy a controlling stake in RBL Bank, the report said.

Reserve Bank of India (RBI) assessed both Fairfax Financial and Kotak Mahindra, and decided that they meet the 'fit and proper' definition, a necessary prerequisite for submission of a financial bid, the report added.

The Centre and LIC plan to jointly offload a 61 percent stake in the lender, which includes 30.48 percent held by the government and 30.24 percent by the insurance firm.

For the financial year 2025-26, the Centre has set a disinvestment and asset monetisation target of Rs 47,000 crore. The IDBI Bank transaction is expected to be one of the most significant contributors to this target, alongside other divestment plans.

According to data from the exchanges on the company's shareholding pattern as on September 30 this year, central government owned 45.48 percent stake in the company while LIC owned 49.24 percent stake. Overall, these two promoters owned 94.71 percent stake in the firm, while the rest of 5.29 percent stake was held by the general public.