New Delhi, July 31 -- Indian-born Canadian billionaire Prem Watsa-led Fairfax has harvested more money from an Indian company that it added to its local portfolio more than a decade ago, marking its second exit move of this year.
The investment group, which operates in India both through the flagship Fairfax Financial Holdings Ltd and the country-focused private equity-style platform Fairfax India Holdings Corp, has sold a little less than a tenth of its 15.18% stake in IIFL Finance Ltd for about Rs 374 crore ($39.2) million, according to stock-exchange data.
This is the first time Toronto Stock Exchange-listed Fairfax India Holdings has monetised its investment in the Mumbai-listed non-bank lender since December 2023, when it sold a stake of about 5.8% for about Rs 1,198 crore ($144 million then). Previously, Fairfax India divested a small portion of its stake in the company for about Rs 250 crore ($30.5 million then) in mid-2023. It also made a partial exit from IIFL Finance in December 2021.
Excluding this week's harvest, Fairfax India had pulled out $177.3 million from partial exits and collected about $7.5 million in dividends from IIFL Finance. This translated into a realised annualised return of 24.9% in dollar terms, according to its latest quarterly disclosures. That tops the 15% internal rate of return (IRR) that PE-style investors typically target in dollar terms.
Fairfax India, led by CEO Gopalakrishnan Soundarajan, held a 22.25% stake in IIFL Finance at the beginning of 2023. This dropped to 20.93% at the end of June and 15.18% by the end of 2023. Its stake would fall to around 13.7% after the latest partial exit.
The latest partial exit comes a little more than two years after Fairfax India made an additional investment in IIFL Finance to help the lender recover from the Reserve Bank of India's ban on gold loans. Fairfax committed to provide liquidity support of up to $200 million to IIFL Finance at the time. It eventually made an equity investment of Rs 207 crore through a rights issue in May 2024. The RBI lifted the ban a few months later.
The Canadian group's investment in the Indian financial services group dates back to 2011. Initially, Fairfax Financial backed India Infoline Ltd-the Indian group's flagship that was later renamed IIFL Holdings Ltd-in 2011. In 2015, Fairfax-through its India-focused vehicle, increased its stake in IIFL Holdings via an open offer. Fairfax India bought more stake in 2017, when it owned more than a third of the company.
The IIFL group has gone through a restructuring over the years, giving Fairfax a stake in four group companies-IIFL Finance, IIFL Wealth, IIFL Securities (now known as IIFL Capital), and discount brokerage 5paisa.
The latest partial exit adds to Fairfax's previous stake sales in three other companies. It offloaded its remaining stake in 360 One WAM Ltd, which was earlier known as IIFL Wealth, and trimmed its stake in IIFL Securities Ltd in 2023.
Earlier this year, Fairfax India invested about Rs 2,000 crore to increase its stake in IIFL Capital to 51% from 30.5%. The Canadian company also clocked an exit this year, by selling its entire stake in Sanmar Chemicals at a loss.
Fairfax's other exits, India portfolio
Apart from IIFL group and Sanmar, Fairfax has made full or partial exits from a few other companies. Last year, the firm sold its entire 51% stake in Saurashtra Freight Pvt Ltd to the Japanese logistics company Kamigumi Co Ltd for Rs 662.2 crore. In 2024, it wrapped up its exit from the National Stock Exchange and made a partial exit from CSB Bank. It made a partial exit from Fairchem Organics in 2022 and a full exit from Privi Speciality Chemicals in 2021.
The Fairfax group has invested in India across sectors such as financial services, business services, chemicals, aviation and logistics. Fairfax Financial made its first India investment in 2001, in ICICI Lombard General Insurance Company, and the second in 2012, when it acquired travel services firm Thomas Cook. Fairfax Financial has since exited ICICI Lombard. Its local portfolio also includes Quess Corp and Go Digit General Insurance.
After 2014, the Canadian group has routed its investments mainly through its India vehicle. Fairfax India initially raised a tad more than $1 billion through a public offering of shares on the Toronto Stock Exchange. It bumped up its corpus by another $500 million two years later. Between 2015 and 2019, Fairfax picked up minority or majority stakes in about a dozen companies.
Over the past five years, however, Fairfax India has added only three companies to its portfolio-Global Aluminium in 2024, Jaynix Engineering in 2022 and Maxop in 2021-and shifted its focus to monetisation. The firm's other portfolio companies are Seven Islands Shipping, Bangalore International Airport Ltd (BIAL) and agri-warehousing firm NCML Ltd. It has also made follow-on investments in some companies such as IIFL Capital and BIAL. Fairfax is also said to be the frontrunner to acquire IDBI Bank, according to multiple media reports.
Published by HT Digital Content Services with permission from VC Circle.