Canadian investor Prem Watsa’s Fairfax India Holdings Corp plans to increase its stake in Indian financial services firm IIFL Holdings IIFL to up to 26 percent for $225 million ( Rs 1600 crore) through a share tender offer.
IIFL is a diversified financial services holding company, with business interests in non-banking finance, housing finance, wealth management, retail broking, institutional equities, investment banking and insurance distribution.
Here are the key facts you need to know about the deal:
1. Fairfax India, a fund Hyderabad-born Watsa set up last year to boost India investments, said its Mauritius unit would buy about 83 million shares of IIFL at Rs 195 each, a premium of 3.6 percent over the Indian firm’s close price on Monday. It expects the offer to close later this year.
“Fairfax India announces that its wholly-owned subsidiary, FIH Mauritius Investments (“FIH”), has issued a public announcement of an open offer to acquire up to approximately 83,128,852 equity shares of IIFL Holdings Limited (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.
2. Fairfax India’s parent Fairfax Financial Holdings already owns about 8.97 percent of IIFL, and has an economic interest of another 5.24 percent through derivative instruments.
3.Shares of IIFL jumped more than 20 percent to Rs 226 on the BSE on Tuesday following the announcement. The open offer, which is in accordance with Sebi regulations, will fetch IIFL Holdings over Rs 1,621 crore, the BSE release said. “The company’s fortunes which to a major extent depend on the stock market performance saw its share gain a paltry 5 percent in the past one month, much similar to the mood prevalent in the broad market sentiment.”
4. Check out Prem Watsa’s, often called “Canada’s Warren Buffett”, who recently established Fairfax India recently to invest in India companies with a goal of making long term returns, statement post the open offer
“IIFL, under the independent leadership of its executive chairman, 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.”
5. IIFL, a diversified financial services holding company, reported revenues of approximately Rs 2,220 crore and profit of Rs 480 crore for the fiscal year ended March 31, 2015. IIFL operates businesses in non-banking finance, housing finance, wealth management, retail broking, institutional equities, investment banking and insurance distribution.
6. Nirmal Jain, chairman of IIFL Group, in an interview to Bloomberg TV India clarified that Fairfax will neither have control over the company nor will it participate in the management.
7. Fairfax India is looking to make at least six investments in India and will target infrastructure, consumer services, retail and exporting industries. Watsa, whose main firm is Fairfax Financial Holdings, set up Fairfax India late last year to boost the firm’s investment in India. Fairfax India went public in January this year and raised more than $1 billion via its initial public offering.