Canada's Fairfax to acquire 26% in IIFL in Rs 1600 cr deal

Prem Watsa-led firm will launch an open offer at Rs 195 a share; deal, if completed, will make the Canadian firm biggest shareholder of the Mumbai-based firm

Canada’s Fairfax India Holdings Corporation is planning to acquire another 26 per cent stake in Mumbai-based financial services firm IIFL Holdings. This, with their existing holdings of 8.97 per cent, would make Fairfax shareholding larger than that of the promoters, if the offer is successful.

Promoter shareholding at the end of the March quarter was 29.77 per cent, according to exchange data. IIFL Group Chairman Nirmal Jain clarified there would be no change in the management or control. He added that the promoters would not be selling their stake in the open offer.

The investment firm on Tuesday announced an open offer to acquire 83.13 million shares in IIFL at Rs 195 per share for a total of Rs 1,621 crore. Shares of IIFL jumped more than 20 per cent to Rs 225.6 on the BSE following the announcement. It closed with gains of 10.13 per cent, at Rs 207.05.

“Fairfax India announces that its wholly-owned subsidiary, FIH Mauritius Investments, has issued a public announcement of an open offer to acquire up to approximately 83,128,852 equity shares of IIFL Holdings Ltd (IIFL), formerly India Infoline Limited, at a price of Rs 195 per share (approximately $3.07 per share at current exchange rates) other than those shares already owned by it and its affiliates according to regulations of the Securities and Exchange Board of India for substantial acquisitions of shares and takeovers (the ‘Offer’),” Fairfax said in a release.

The offer is expected to close later this year, subject to receipt of regulatory approvals in India, it added.
 

 

Fairfax, in addition to its nearly 9 per cent stake in IIF, has an economic interest in another approximately 5.24 per cent of IIFL through derivative instruments.

“IIFL, under the independent leadership of Nirmal Jain has an impressive management team with a strong, long-term history of profitable growth, which fits within our strategy for investing in well-managed companies with high integrity and long-term track records in India,” said Prem Watsa, Fairfax India's chairman.

Watsa, known as "Canada’s Warren Buffett" in investment circles, established Fairfax India recently to invest in Indian companies with a goal of making long-term returns. IIFL is a strong domestic player in the non-banking finance, housing finance, wealth management, retail broking, institutional equities, investment banking and insurance distribution space.

The open offer will be managed by ICICI Securities. Fairfax Financial Holdings subsidiary Fairbridge Capital bought out Thomas Cook UK’s 77 per cent stake in the India unit for Rs 810 crore in 2012.