Fairfax India to buy 74% stake in NCMSL for $126 mn

Fairfax India on Monday announced the acquisition of 74 per cent stake in National Collateral Management Services (NCML), India's largest non-government grain handling company, for Rs 800 crore ($126 million), valuing NCML at Rs 1,080 crore ($170 million).  

Fairfax India Holdings Corporation said it would acquire the stake through its wholly-owned subsidiary FIH Mauritius Investments.

“The transaction is subject to customary closing conditions and is expected to be completed later in 2015,” the statement noted.

NCML is the largest warehousing service provider and collateral management company in the private sector, mostly handling agri-commodities. It has a capacity to store 1.1 million tonnes.

The company is also into weather advisory services; it has 3,300 weather work stations across India.

While Fairfax has not disclosed from whom it would buy the stake, sources said Indian Farmers Fertiliser Cooperative, Rabo Equity Advisors, and International Finance Corporation were selling their combined stake of nearly 70 per cent.

NCML is also considering selling fresh equity shares to raise funds for the company for using in expansion.

NCML was set up in 2004 by the National Commodity and Derivatives Exchange. Fairfax said NCML “is preparing to expand to take advantage of the significant market potential in India's under-developed agricultural storage industry”. NCDEX later sold stake and retained only five per cent.

The company operates in the mid-stream agriculture value chain by offering end-to-end solutions in grain procurement, testing, storage and collateral management. The other players preparing big expansion plans in this area include StarAgri and Edelweiss Commodities.

“We are looking forward to investing in National Collateral which, under  CEO Sanjay Kaul, will continue to build on its position as the largest private-sector agriculture warehouse and grain collateral storage company in India,” said Prem Watsa, chairman, Fairfax India.

Fairfax Financial, Fairfax India's controlling shareholder holding a 40 per cent stake in AFGRI Holdings, Africa's largest grain storage company, said: “We had the advantage of expert diligence that was conducted by AFGRI Holdings and financial advisory services of IDFC Securities.”
PREM WATSA’S INDIA DEALS

July 2015  

• Fairfax India Holdings Corp announces it would buy 74% stake in National Collateral Management company for $126 million
   
• Fairfax India Holdings Corp buys 26% stake in financial services firm, IIFL Holdings for $225 million

February 2014

• Vatsa-owned Thomas Cook India acquires Sterling Holidays for Rs 870 crore. This was Thomas Cook’s second purchase after Ikya Human in February 2013

May 2012

• Fairfax Financial Holdings buys 77% interest in Thomas Cook (India) at Rs 817 crore