Warburg in lead to buy part of Watsa's ICICI Lombard stake

Stake of slightly more than 25% valued at about $1billion

Warburg Pincus is the frontrunner to acquire a minority stake in Indian insurer ICICI Lombard General Insurance Co from Prem Watsa’s Fairfax Financial Holdings, according to people familiar with the matter.

Toronto-based Fairfax, which owns 35 per cent of ICICI Lombard, is looking to sell a little more than a quarter of the company for as much as $1 billion, said the people, who asked not to be identified because the matter is private. Fairfax needs to shrink its holding to appease regulators as it looks to launch a new joint venture in the country, the people said.

Warburg was selected alongside Carlyle Group LP and Singapore's Temasek Holdings Pte to submit final bids for the stake last month, they said. Talks between Warburg and Fairfax are ongoing and may still fall apart, they said.

ICICI Lombard is a joint venture formed in 2001 between ICICI Bank and Fairfax.

Representatives for Carlyle, Temasek, ICICI Bank and Warburg Pincus declined to comment. Representatives for Fairfax didn't respond to requests for comment.

Fairfax is launching a new general insurance venture in India with Kamesh Goyal, a former executive at German insurer Allianz SE, the people said, and aims to hold 45 per cent of the new venture. To push forward with that plan, it must own less than 10 per cent of ICICI Lombard under Indian regulations, one of the people said.

Fairfax India

Hyderabad-born Watsa has been active in India, launching an investment vehicle, Fairfax India Holdings Corp, two years ago to target acquisitions in the country. Fairfax India has made several acquisitions, including a minority stake in the Bangalore International Airport last March.

The ICICI Lombard stake would be the largest investment for New York-based Warburg Pincus in India, according to data compiled by Bloomberg. In 2015, it acquired a stake in Piramal Realty Pvt for about $283 million, the data show.

Bloomberg