Fairfax likely to buy 10% more in IIFL Capital via preferential allotment

Synopsis

Fairfax Financial Holdings plans to boost its stake in IIFL Capital Services. The deal is valued at approximately ₹1,000 crore. This move will see Fairfax's holding increase by about 10%. The transaction is expected to trigger an open offer under Indian regulations. Prem Watsa's firm is doubling down on its investment after thorough due diligence.

Mumbai: Prem Watsa-backed Fairfax Financial Holdings is set to increase its stake in IIFL Capital Services through a preferential allotment in a transaction estimated around ₹1,000 crore, multiple people aware of the discussions told ET.

Fairfax, which has been conducting due diligence over the past three months, has reached a mutual agreement to raise its holding by approximately 10%, the sources said. Currently, Fairfax Group is the second-largest shareholder in IIFL Capital, with a 30.5% stake held through FIH Mauritius Investments. Fairfax also holds 15.18% in IIFL Finance.

The proposed transaction is likely to trigger an open offer under India's takeover regulations, which mandate the acquirer to make an open offer when voting rights exceed 25% of the equity.

Fairfax first invested in IIFL Holdings in 2011, acquiring a 9% stake in it.

"Multiple private equity investors had evaluated the company over the past few months, but Fairfax ultimately decided to double down on its investment after completing detailed diligence and gaining comfort on the business outlook," said a person aware of the discussions. "The move reflects a high-conviction call by Prem Watsa to further back the franchise."

Fairfax Holdings and IIFL Capital did not respond to ET's query until press time.

Promoters Nirmal Jain and his wife Madhu Jain hold 30.98%, while Abu Dhabi Investment Authority is also among the key investors besides Fairfax. Nirmal Jain's broader financial services portfolio spans IIFL Capital, shadow bank IIFL Finance, online broker 5Paisa Capital, and a minority stake in 360 One.

IIFL Capital, based in Mumbai, pivoted toward becoming a full-service wealth manager in 2024, rebranding from IIFL Securities in the process. It operates through more than 100 branches and 3,500 external wealth partners across the country.

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