Fairfax India to invest $300 mln in Sanmar Chemicals

By Devidutta Tripathy and Euan Rocha

MUMBAI/TORONTO (Reuters) - Fairfax India Holdings said on Friday it has agreed to acquire a minority stake in privately held Indian petrochemical company Sanmar Chemicals via a roughly $300 million investment.

The Sanmar investment is the latest in a string of bets Fairfax India and its sister concern Fairfax Financial Holdings Ltd have made in the country within the last year. The two entities are chaired by Canadian billionaire Prem Watsa.

Indian-born Watsa, whose main investment vehicle is Fairfax Financial Holdings, set up Fairfax India in 2014 to hone in on investments in that country, where he expects strong long-term growth driven by Prime Minister Narendra Modi's economic reform agenda.

"The economy in Canada is about $2 trillion with only 35 million people, while India by comparison with 1.2 billion people plus has an economy the same size. It's an unbelievable opportunity," said Watsa, in an interview.

The investment in Sanmar that will give Fairfax a 30 percent equity stake in the company, is being made via a combination of equity and fixed income instruments, as Reuters had initially reported earlier on Friday.

Sanmar, a family-owned firm chaired by N. Sankar, is one of India's largest producers of polyvinyl chloride (PVC). The firm, which owns manufacturing facilities in India and Egypt, is also a manufacturer of other specialty chemicals.

Sanmar is also in the process of expanding its PVC capacity in Egypt from 200,000 tons a year to 400,000 tons a year. Once completed, Sanmar will have a total PVC capacity exceeding 700,000 tons a year, making it one of the largest PVC makers globally.

This investment, Watsa's latest bet in India, comes barely weeks after Fairfax agreed to buy a 33 percent equity interest in the Bangalore International Airport from GVK Power and Infrastructure Ltd for $321 million.

"We just bought a 33 percent stake in the Bangalore airport, and we hope to add more over time, as that airport is going to expand," said Watsa. "The Indian economy is going to expand, it just stands to reason that as the economy expands there'll need to be more infrastructure investments."

Back in February, Fairfax bought a 45 percent stake in ADI Finechem, a small Ahmedabad-based specialty chemical company, for $19 million. Last August, it acquired a majority stake in India's largest nongovernment grain-handling company, National Collateral Management Services Ltd, for $126 million.

(Additional reporting by Arathy S Nair in Bengaluru and Krishna N. Das in Mumbai; Editing by Sriraj Kalluvila)