Fairfax Financial likely to exit IIFL Finance, sources say
ReutersThe sale is intended to unlock funds for Fairfax's purchase of a 60% stake in IDBI Bank from India's federal government and the Asian country's largest insurer. The IDBI deal, valued at 528.78 billion rupees ($5.56 billion), is among India's largest cross-border banking transactions.
To fund part of the deal, Fairfax is looking to complete the IIFL Finance exit "soon", one of the people said.
At the current market price, Fairfax's stake in IIFL Finance will be worth roughly 30 billion rupees or $320 million.
Fairfax will likely sell its stake in the secondary markets and the controlling shareholders of the non-bank lender do not intend to buy the stake, one of the persons said.
Both people declined to be identified as the discussions are confidential.
Fairfax and IIFL did not immediately respond to emails seeking comment.
Fairfax bought a nearly 22% stake in IIFL Finance in 2015, but the stake has since been diluted to 11% following an expansion of the non-bank lender's capital base.
On Tuesday, IIFL Finance said that it would expand its capital base, with US investment fund Blackstone purchasing 16% of equity via convertible shares and warrants.
Separately, Fairfax has a 38% stake in IIFL Capital Services, which runs investment banking and wealth management businesses, and is in the process of raising the stake to 51% through an open offer, according to the Canadian firm.
In case Fairfax cannot raise its stake in IIFL Capital through the open offer, which ends on Monday, the controlling shareholders will reduce their stake in the company, the first person said.
IIFL Capital and IIFL Finance have the same controlling shareholders.
IIFL Capital did not immediately respond to a request for comment.
Fairfax is also looking to fold its investments in IIFL Capital and insurance firm Digit into IDBI Bank, the firm said last month.