Fairfax India Holdings Corp (FIH), which has just raised another $500 million to invest in India, has put in fresh money to buy additional 4.99% stake in financial services company IIFL Holdings Ltd (formerly India Infoline).
The Toronto Stock Exchange-listed investment firm that was sponsored by India-born Canadian businessman Prem Watsa’s Fairfax Financial Holdings Ltd, has hiked its holding in IIFL to 26.65%, as per a regulatory filing.
Together with another investment entity under Fairfax Financial, which holds 8.79% stake, Fairfax as a group now has 35.44% stake in IIFL. This is well above the 29% stake owned by the promoters of IIFL. Fairfax also has a board seat in IIFL.
FIH Mauritius Investments Ltd, which is part of Fairfax India, picked the stake through an off market transaction on 8 February. It did not disclose the deal value, name the seller or clarify if it bought from a clutch of shareholders.
At the weighted average price of Rs 319.44 per share on BSE on Wednesday, Fairfax may have shelled out around Rs 503.4 crore ($75 million) to buy the additional stake.
Canadian investment giant Fairfax, led by India-born Prem Watsa, first invested in IIFL in 2011 when it acquired a 9% stake through Hamblin Watsa Investment Counsel Fund. The fund owned about 8.8% of IIFL as of 31 December 2016.
In July 2015, Fairfax India made a voluntary open offer to buy 26% of IIFL for Rs 1,621 crore ($255.4 million then). This was its debut deal after raising $1.06 billion to invest in the country.
It picked 21.85% in the open offer for Rs 1,341.37 crore (approximately $211 million).
Fairfax also had an economic interest of another 5.24% stake through derivative instruments. It is not clear if it retains these derivative instruments.
IIFL Holdings
Set up in 2004, IIFL Holdings is a holding company for broking, non-banking finance, housing finance, wealth management, institutional equities, investment banking and insurance distribution, among other financial services.
IIFL Holdings is led by executive chairman Nirmal Jain. Promoters held 29.08% of the firm as on 31 December 2016.
The company reported consolidated profit after tax of Rs 222.26 crore on total income of Rs 1,270.54 crore for the three months ended 31 December 2016.
IIFL doesn’t accept public deposits and offers home, gold, vehicle and business loans to small and medium-sized companies through almost 1,000 branches. For the year through March 2016, its loan book was Rs 17,770 crore while net profit stood at Rs 340 crore.
In November last year, IIFL acquired Samasta Microfinance Ltd, a Bangalore-based NBFC to enter the microfinance segment and expand its offerings.
IIFL—formerly known as India Infoline—has attracted several marquee investors in recent years. In July last year, CDC Group Plc, the UK government-owned development finance institution, invested Rs 1,000 crore ($150 million) in the non-banking financial arm of IIFL Holdings.
The stake purchase by Fairfax India arm follows a minority stake acquisition on Monday by IDFC Bank Ltd. The Mumbai-headquartered private sector lender bought about 15 million shares, or 5% stake, for about Rs 503 crore ($75 million), stock exchange data showed. IDFC Bank acquired shares from JP Morgan.
JP Morgan held a 5.13% stake in IIFL through an investment vehicle, Copthall Mauritius Investment Ltd.
IDFC Bank has been aggressively picking up stakes in financial services companies after securing a banking licence. It has so far bought into Grama Vidiyal Microfinance, Suryoday Small Finance Bank Ltd and ASA International India Microfinance Pvt. Ltd.
Fairfax
This transaction implies Fairfax India has quickly got on to deploy its fresh money. Last month it raised additional capital to take overall corpus to over $1.5 billion.
It had deployed almost entire initial $1 billion corpus in the last two years.
Last month, Fairfax India also inked a deal to pick a 51% stake in Saurashtra Freight Pvt. Ltd for Rs 200 crore ($30 million).
With this it has already deployed a fifth of its additional corpus in a month.
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