Prem Watsa-led Fairfax India plans to increase its stake in IIFL Capital Services to 51 per cent through a Rs 2,000 crore capital infusion, alongside an open offer and promoter arrangements. (File Photo)
Fairfax group of Canada has proposed to hike its equity holding in IIFL Capital Services Ltd to 51 per cent through capital infusion of Rs 2,000 crore at a price of Rs 350 per share.
Fairfax India Holdings Corporation, founded by Prem Watsa, will increase its stake in IIFL Capital Services through its wholly owned subsidiary, FIH Mauritius Investments Ltd. The increase will be carried out through a combination of transactions, including a preferential allotment of equity shares, an open offer and arrangements with the existing promoters, raising its shareholding in the company to at least 51 per cent from 30.5 per cent.
Upon completion of the transaction, Fairfax India and its affiliate, HWIC Asia Fund Class A will join the existing promoter group alongside Nirmal Jain and R Venkataraman.
Fairfax acquired CSB Bank in 2018 and it currently holds 40 per cent stake in the bank. It was also in the race to acquire stake in IDBI Bank. India-born Watsa has been the Chairman and Chief Executive Officer of Fairfax Financial Holdings Limited since 1985 and the Vice Chairman of Hamblin Watsa Investment Counsel Ltd since 2019.
The Fairfax Group has been a longstanding shareholder of the company. Fairfax currently holds about 30.5 per cent in IIFL Capital. Subject to shareholder and regulatory approvals, FIH Mauritius will have the right to nominate two directors on the board of the company.
IIFL Capital shares rose by 4 per cent to Rs 345 in the opening session on the BSE on Thursday.
The proposed transaction remains subject to customary regulatory, and shareholder approvals, including applicable open offer requirements under SEBI regulations.
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“The proposed capital infusion of Rs 2,000 crore at Rs 350 per share, will significantly 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,” IIFL said in a statement.
“Fairfax’s global reputation, long-term investment philosophy, financial strength, and international network are expected to further enhance IIFL Capital’s strategic positioning, strengthen institutional credibility, broaden global relationships, and support a lower cost of capital over time,” it said in the statement.
The induction of Fairfax representatives onto the board is also expected to further strengthen governance standards, oversight, risk management frameworks, and institutional processes, while preserving the entrepreneurial and execution-focused culture of the company.
Prem Watsa, Founder of Fairfax India, said, “with this new capital infusion we believe the company 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.”
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“Fairfax India (and its affiliate) has been a trusted long-term partner of the IIFL Group for over 15 years, and together we have created significant value for all stakeholders. Over the years, this relationship has been built on deep mutual trust, shared values and a long-term commitment to institution building,” said Nirmal Jain, Promoter, IIFL Capital.
“At a time when the Indian economy and financial markets are at a major inflection point, we believe this is the right moment for IIFL Capital to benefit from strong parentage and position itself for the next phase of growth. This transaction reflects Fairfax’s continued confidence in IIFL Capital’s leadership team, and its robust business model,” said R Venkataraman, Co-Promoter and Managing Director, IIFL Capital.
IIFL Capital offers broking services, wealth management, financial products distribution, institutional broking, research and investment banking services.
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