IIFL Holdings Soars on Fairfax Open Offer For 26% Stake

Sharemasterindia.com: IIFL Holdings shares jumped more than 20 per cent on Tuesday after billionaire Prem Watsa controlled Fairfax India announced its decision to acquire 26 per cent in the diversified financial services company.

IIFL, which operates businesses in non-banking finance, housing finance, wealth management, broking, investment banking and insurance distribution, had reported a net profit of Rs 480 crore on revenues of Rs 2,220 crore for the fiscal year ended March 31, 2015.

64-year old Mr Watsa, popularly called 'Canada's Warren Buffett', had previously invested in companies such as Research in Motion - the makers of BlackBerry handsets.

"IIFL...has an impressive management team with a strong, long-term history of profitable growth, which fits within our strategy for investing in well-managed companies with high integrity and long-term track records in India," said Mr Watsa, who is the chairman of Fairfax India.

Set up last year, Fairfax India went public in Canada in January this year and raised more than $1 billion via its initial public offering.

Fairfax India's wholly-owned subsidiary - FIH Mauritius Investments - will buy 8.32 crore shares in IIFL Holdings from the open market at a price of Rs 195 per share, a premium of 3.6 per cent to IIFL's Monday closing price. In all, Fairfax is likely to spend Rs 1,621 crore for 26 per cent stake in IIFL Holdings. The offer is expected to close later this year.

Fairfax India's parent - Fairfax Financial Holdings - already owns 8.97 per cent in IIFL; it has an economic interest in another 5.24 per cent of IIFL through derivative instruments, the company said.

IIFL Holdings' executive chairman Nirmal Jain told NDTV that the promoter group, which has around 30 per cent stake in the company, will not tender shares in the open offer.

"This is a reaffirmation of positive outlook in India particularly in the sector," Mr Jain said.

As of 09.45 a.m., IIFL Holdings shares traded 11 per cent higher at Rs 208.70. The stock outperformed the broader Nifty, which traded 0.2 per cent lower.