Canadian investment firm Fairfax India Holdings Corp will infuse Rs 2,000 crore (around $211 million) into IIFL Capital Services Ltd to increase its stake in the Indian broking firm to at least 51%.
Fairfax, led by Indian-born Canadian billionaire Prem Watsa, will make the investment through a preferential allotment of shares at Rs 350 apiece, according to a press release on Thursday. This is a premium of 5.6% from IIFL Capital’s closing share price on Wednesday.
Upon completion of the transaction, Fairfax India’s stake in IIFL Capital will rise to a minimum of 51% from 30.5% currently. It will also trigger an open offer to public shareholders for an additional 26% stake as per India's capital market regulations.
Fairfax India will join the company’s promoter group alongside Nirmal Jain and R. Venkataraman. Subject to shareholder and regulatory approvals, it will have the right to nominate two directors on the board of the company.
IIFL Capital said the capital infusion will strengthen the company’s balance sheet and support the next phase of growth across its capital markets, wealth management, asset management, institutional equities, investment banking, and related financial services businesses. The induction of Fairfax representatives onto IIFL Capital’s board will strengthen governance standards, oversight, risk management frameworks, and institutional processes.
“...With this new capital infusion, we believe IIFL Capital is well positioned for the future as it expands its wealth and asset management services offerings, while maintaining its leading position in retail broking and financial services,” Prem Watsa, founder, of Fairfax India said.
IIFL Capital Services, earlier known as IIFL Securities, offers broking services, wealth management, financial products distribution, institutional broking, research and investment banking services. It has over $28 billion of assets under management and custody, a nationwide network of over 100 branches and over 3,100 external wealth managers.
In April, the company announced the first close of a private credit fund, after securing Rs 500 crore in commitments.
