Fairfax to raise $500 mn for India buys

Industry: Other 2016-09-30

Enthused with his investments giving good returns in India, Canada-based billionaire Prem Watsa-owned Fairfax Financial Holdings is raising $500 million to fund its acquisitions in the country.

The group has already made a string of acquisitions in India, including a majority stake in travel firm Thomas Cook India, a minority stake in financial services firm, IIFL Holdings, and stakes Bangalore International Airport and Sanmar Chemicals.

According to bankers close to the development, Fairfax is in talks to pick up 10 per cent stake in Catholic Syrian Bank – a South India-based private sector bank and is in the market to raise funds for the acquisition. The bank needs Rs 500 crore of fresh capital to support its growth plan.

The latest fundraising exercise will be led by Bank of Nova Scotia as the lead manager in the offshore markets.

In India, many debt-heavy companies require urgent equity infusion to expand their operations and reduce bank loans, and bankers said Fairfax might infuse funds in these companies as a strategic investor.

The main reason for Watsa’s optimism on India is the high returns generated by the group’s India investments in the listed space.

Take for example, in May 2012, Watsa bought 68 per cent stake in Thomas Cook Indian for Rs 817 crore.

In February 2014, Thomas Cook expanded its presence as it took over Sterling Holidays for Rs 870 crore and Kuoni India for Rs 535 crore in 2015.

Since Watsa took over Thomas Cook, the market value of the company has increased from Rs 1,300 crore to Rs 7,300 crore – adding close to Rs 6,000 crore to the company’s market capitalisation.

In December last year, the group increased its stake in financial services firm IIFL Holdings to 30 percent for an additional Rs 1,341 crore. The 30 per cent stake in IIFL is worth Rs 2,600-crore as on Wednesday.

Bankers said Fairfax India, a subsidiary of the holding firm, had raised close to a billion dollars last year via an initial public offer in Canada and invested in a string of acquisitions.

In November 2015, Fairfax acquired 49 per cent stake in Quantum Advisors for $46 million (Rs 308 crore).

This year, the group acquired stake worth $322 million (Rs 2,157 crore) in Bengaluru airport from the GVK Group and paid another $300 million (Rs 2,010 crore) for 30 per cent in Sanmar Chemicals.

In July this year, Fairfax India acquired 51 per cent in Privi Organics for Rs 370 crore.

Just two weeks ago, Fairfax India completed a $225-million (Rs 1,500 crore) credit facility with a syndicate of Canadian banks. Fairfax is also one of the shareholders in ICICI Lombard, a general insurance company in India.

WATSA’S INDIA BET